Triton Container Leasing will go private in a $13.3 billion deal.

Brookfield Infrastructure Partners is taking Triton International, the world’s largest owner and lessor of shipping containers, private in a $13.3 billion deal.

Brookfield Infrastructure (NYSE: BIP) will pay $85 per share for Triton (NYSE: TRTN), representing a 35% premium over Triton’s Tuesday closing price. Triton shareholders will receive $68.50 in cash per share, with the balance paid in partial shares of Brookfield stock.

Triton announced Wednesday that the deal values its equity at $4.7 billion, with the rest covering net debt. The transaction, pending shareholder and regulatory approvals, is expected to close in the fourth quarter.

“We believe that this transaction provides an excellent outcome for all of Triton’s stakeholders,” said Triton CEO Brian Sondey. Brookfield Infrastructure (NYSE: BIP) will pay $85 per share for Triton (NYSE: TRTN), a 35% premium over Tuesday’s closing price.

This combination resulted in the world’s largest container lessor. Triton now has over 7 million twenty-foot equivalent units in its fleet.

Triton will keep an investment-grade balance sheet and gain access to $143 billion in assets under management by Brookfield for future growth.

The current management team is expected to remain.

Sam Pollock, CEO of Brookfield Infrastructure, said, “Triton offers stable cash flows, strong margins, and a solid value-creation track record. This deal gives us a high initial cash yield, strong downside protection, and growth opportunities in transportation and logistics.”

Throughout the pandemic, intermodal containers were difficult to come by due to labor shortages that kept boxes stuck at ports and warehouses. However, bottlenecks in the supply chain are now easing. In fact, Triton’s asset utilization metrics clearly reflect this shift. For instance, the company utilized nearly 99.6% of its box fleet when it entered 2022. Nevertheless, by the time of its fourth-quarter report in February, that percentage had dropped to 97.6%. Thus, while challenges remain, signs of improvement are evident.

Finished 2022 with nearly $1.7 billion in leasing revenue and just over $700 million in adjusted net income. During the year, it leveraged strong cash flow generation to repurchase 14% of its outstanding shares. Additionally, it reduced debt leverage and, consequently, maintained a dividend payout ratio of around 30% (dividends paid as a percentage of net income).

Private equity firms have been acquiring providers with appealing cash flow characteristics and asset portfolios covered by long-term leases.

“Liam Burke, managing director at B. Riley Securities, noted, “Triton leads the market in container leasing and logistics.Moreover, it provides Brookfield with a consistent stream of underlying cash flows through its existing long-term contracts with strong counterparties. Furthermore, this stability not only ensures reliable returns but also enhances the overall value of the investment.

Mitsubishi HC Capital acquired container lessor CAI in 2021.

Triton’s exclusive financial adviser on the transaction is Goldman Sachs (NYSE: GS). Brookfield Infrastructure is utilizing the services of BofA Securities (NYSE: BAC) and Mizuho Securities USA (NYSE.ADR: MFG).

Brookfield Infrastructure is a subsidiary of Brookfield Corp., a Toronto-based firm that manages approximately $800 billion in assets.