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Stonepeak to Acquire Shipping Container Company Textainer – Merger Arbitrage Mondays

  • October 23, 2023

Key Highlights

  • The acquisition of Textainer Group Holdings Limited (TGH) by Stonepeak in an all cash deal for $7.4 billion.
  • Consolidated Communications Holdings (CNSL) and Olink Holding AB (OLK) acquired at premiums of over 40%.
  • Broadcom’s (AVGO) acquisition of VMware (VMW) threatened by China but receives approval from South Korea.
  • Wyndham Hotels (WH) rejected Choice Hotels’ (CHH) $9.8 billion takeover offer.

Textainer Group Holdings Limited (TGH) $34.15

Market Cap: $1.41 billion

Enterprise Value: $6.85 billion

Infrastructure investor Stonepeak struck a deal to acquire Bermuda based shipping container lessor Textainer (TGH) in a $50 all cash deal. The deal has an enterprise value of $7.4 billion including debt.

About Textainer

Textainer has been in operation since 1979 and ranks among the world’s largest lessors of intermodal containers, with a fleet exceeding 4 million TEU (twenty-foot equivalent unit) that they own and manage. The company leases containers to around 200 customers. Textainer’s fleet encompasses standard dry freight, refrigerated intermodal containers, and dry freight specials.

The company engages in tank container leasing through its association with Trifleet Leasing and serves as a container supplier to the U.S. military. Apart from selling older containers from its fleet, the company also purchases used containers from its shipping line clientele for the purpose of trade and resale.

Over the past five years, Textainer, on average, sold approximately 130,000 containers annually to more than 1,000 customers, solidifying its position as one of the primary sellers of used containers. The company’s global operations are facilitated through a network of 14 offices and around 400 depots situated worldwide.

Textainer Fleet Overview

Financial Overview

In recent months, Textainer experienced notable fluctuations in its share price, reaching a peak of $42.73. Over the past year, the company has enjoyed an impressive run, with its share price surging by nearly 40%. It is currently trading at a P/E ratio of less than 8 and offers a dividend yield of over 3%.

Textainer Financial Highlights

Definitive Merger Agreement With Stonepeak

On October 22, 2023, Textainer entered into a definitive agreement to be acquired by Stonepeak for an enterprise value of approximately $7.4 billion.

Headquartered in New York, Stonepeak specializes in real asset investments. With over $57 billion in assets under management, the company supports enterprises in the fields of communications and digital infrastructure, energy, energy transition, as well as transportation and logistics.

Under the terms of the agreement, Textainer common shareholders will receive $50 per share in cash. The purchase price represents a premium of approximately 46% over Textainer’s closing share price on October 20, 2023.

The merger agreement includes a 30-day “go-shop” period that will expire on November 22, 2023, which will permit Textainer to continue to actively solicit and consider alternative acquisition proposals.

Subject to customary closing conditions, including approval by Textainer shareholders and the receipt of required regulatory clearances and approvals, the deal is expected to be completed in the first quarter of 2024. According to the merger agreement, the transaction is not subject to a financing condition.

The current spread on the deal appears very large because the deal was announced over the weekend and the stock price is yet to react to the merger agreement.


Merger Arbitrage activity decreased last week with three new deals announced, four deals completed and one deal terminated.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.

Merger Arbitrage

Deal Statistics:

Total Number of Deals Closed in 2023145
Total Number of Deals Not Completed in 202312
Total Number of Pending Deals
Cash Deals46
Stock Deals20
Stock & Cash Deals5
Special Conditions6
Total Number of Pending Deals77
Aggregate Deal Consideration$912.99 billion

New Merger Arbitrage Deals:

  1. The acquisition of Consolidated Communications Holdings, Inc. (CNSL) by Searchlight Capital Partners and British Columbia Investment Management Corporation for $3.1 billion or $4.70 per share in cash. We added CNSL as a potential deal to the Deals in the Works section on April 13, 2023, and the price after the news of the potential deal came out was $3.83.
  2. The acquisition of Olink Holding AB (OLK) by Thermo Fisher Scientific (TMO) for $3.1 billion or $26 per share in cash.
  3. The acquisition of Textainer Group Holdings Limited (TGH) by Stonepeak for $7.4 billion or $50 per share in cash.

Deal Updates:

  1. On October 16, 2023, PolyMet Mining (PLM) announced that Institutional Shareholder Services and Glass Lewis & Co., have recommended PolyMet shareholders vote FOR the plan of arrangement with Glencore AG.
  2. On September 29, 2023, Burke & Herbert (BHRBsubmitted a request to the Federal Reserve Bank of Richmond to waive the applicable application requirements of the BHCA with respect to the merger with Summit Financial Group (SMMF). Initial submission of the applications for seeking approval was also made to the Virginia State Corporation Commission (VBFI) on September 29, 2023.
  3. On October 17, 2023, Abcam (ABCM) announced that independent proxy advisor Institutional Shareholder Services recommended that Abcam shareholders vote “FOR” Danaher Corporation’s (DHR) proposed acquisition of Abcam.
  4. October 18, 2023: Splunk (SPLK) and Cisco (CSCOeach filed their notifications and report forms under the HSR Act with respect to the merger with the FTC and DOJ on October 12, 2023. The HSR waiting period is expected to expire on November 13, 2023.
  5. On October 18, 2023, Crestwood Equity Partners (CEQP) announced that independent proxy advisory firm Institutional Shareholder Services recommends that unitholders vote “FOR” the pending transaction with Energy Transfer (ET).
  6. On October 18, 2023, Broadcom (AVGO) and VMware (VMW) announced that the deadline for VMware stockholders of record to elect the form of merger consideration they wish to receive in connection with Broadcom’s acquisition of VMware is on October 23, 2023.
  7. On October 19, 2023, AG Mortgage Investment Trust (MITT) and Western Asset Mortgage Capital Corporation (WMC) jointly announced that they have determined the final exchange ratio in accordance with the terms of the Agreement and Plan of Merger. Each outstanding share of WMC common stock will be converted into the right to receive 1.498 shares of MITT common stock.
  8. On October 20, 2023, Sequans Communications (SQNS) and Renesas Electronics Corporation announced that Renesas has extended the expiration date of its tender offer to acquire all of the outstanding ordinary shares of Sequans to November 6, 2023.

Approvals:

  1. On October 16, 2023, Sovos Brands (SOVO) announced that its stockholders approved the previously announced acquisition of the company by Campbell Soup Company (CPB).
  2. Fiesta Restaurant Group (FRGI) announced that the waiting period under the HSR Act expired on September 15, 2023.
  3. On October 17, 2023, CIRCOR International (CIR) confirmed that all regulatory approvals relating to the merger had been received. The merger is expected to close before market hours on October 18, 2023.
  4. On October 17, 2023, Veritiv Corporation (VRTV) announced that its stockholders voted in favor of all proposals, including a proposal to approve the Company’s pending acquisition by an affiliate of Clayton, Dubilier & Rice.
  5. On October 19, 2023, Seagen (SGEN) and Pfizer (PFEreceived approval from the European Commission. The merger is expected to be completed in late 2023 or early 2024.
  6. On October 19, 2023, PacWest Bancorp (PACW) announced that the Board of Governors of the Federal Reserve System granted its approval of the previously announced combination of PacWest and Banc of California (BANC).
  7. On October 19, 2023, Avid Technology (AVID) announced that it had received all required regulatory approvals and clearances set forth in the Merger Agreement to complete the merger with an affiliate of STG.
  8. On October 19, 2023, NextGen Healthcare, Inc. (NXGN) announced that the waiting period under the HSR Act expired on October 19, 2023.
  9. On October 20, 2023, Broadcom’s (AVGO) planned purchase of VMware (VMWreceived approval from South Korea.

Hurdles:

  1. October 17, 2023: According to Bloomberg, Dan Och and a group of former executives of Sculptor Capital Management (SCUsued the hedge fund and proposed acquirer Rithm Capital (RITM), saying the deal would shortchange investors in favor of protecting Sculptor Chief Executive Officer Jimmy Levin’s job.
  2. October 19, 2023: According to a Financial Times report, China’s State Administration for Market Regulation will likely delay approving the VMware (VMW) acquisition by Broadcom (AVGO), especially after the U.S. moves on tougher chip controls.

Shareholders Meeting Schedule

  1. Avantax (AVTA) – November 21, 2023
  2. Chindata Group Holdings Limited (CD) – December 4, 2023
  3. Summit Financial Group (SMMF) – December 6, 2023
  4. On October 16, 2023, Timber Pharmaceuticals (TMBRconvened and then adjourned its 2023 Special Meeting of Stockholders to October 30, 2023.

Closed Deals:

  1. The acquisition of Thorne HealthTech (THRN) by L Catterton was completed on October 16, 2023. It took 49 days for this deal to be completed.
  2. The acquisition of Heritage-Crystal Clean (HCCI) by J.F. Lehman & Company was completed on October 17, 2023. It took 90 days for this deal to be completed.
  3. The acquisition of eMagin Corporation (EMAN) by Samsung Display Co., Ltd. was completed on October 18, 2023. It took 154 days for this deal to be completed.
  4. The acquisition of CIRCOR International (CIR) by investment funds managed by KKR & Co. Inc. (KKR) was completed on October 18, 2023. It took 135 days for this deal to be completed.

Terminated Deal:

  1. On October 20, 2023, Great Ajax (AJX) and Ellington Financial (EFC) agreed to terminate the merger agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between October 13, 2023, and October 20, 2023.

SymbolQuoteAcquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
VMW150.91Broadcom Inc. (AVGO)853.47-5.57%-19.84%14.27%Special Conditions
SCU12.13Rithm Capital Corp. (RITM)9.01-1.07%-8.76%7.69%All Cash
IRBT36.2Amazon (AMZN)125.1742.96%35.33%7.63%All Cash
WRK34.32Smurfit Kappa (SMFTF)31.66.64%1.89%4.75%Cash Plus Stock
SQNS2.78Renesas Electronics Corporation (N/A)8.99%4.84%4.15%All Cash
PTRS7.46LINKBANCORP, Inc. (LNKB)6.28-3.19%1.46%-4.65%All Stock
SAVE16.34JetBlue Airways Corporation (JBLU)4.4889.72%94.60%-4.88%All Cash
PACW7.36Banc of California, Inc. (BANC)11.381.57%7.58%-6.01%All Stock
CWBC12.74Central Valley Community Bancorp (CVCY)15.55-3.58%2.65%-6.23%All Stock
ACER0.825Zevra Therapeutics, Inc. (ZVRA)4.215-26.06%-19.74%-6.32%Special Conditions

Top 10 Merger Arbitrage Deals With The Largest Spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$16.3406/30/202489.72%130.47%
MIXT10/10/2023PowerFleet, Inc. (PWFL)$8.94$5.5103/31/202462.21%141.93%
TGH10/22/2023Stonepeak (N/A)$50.00$34.1503/31/202446.41%105.88%
IRBT08/05/2022Amazon (AMZN)$51.75$36.202/05/202442.96%149.32%
ACI10/14/2022The Kroger Co. (KR)$27.25$22.2703/31/202422.36%51.01%
GTH10/11/2023New Genetron Holding Limited and Genetron New Co Limited (N/A)$1.36$1.1603/31/202417.24%39.33%
NGMS05/14/2023Aristocrat Leisure Limited (ALL.AX)$29.50$25.57505/14/202415.35%27.46%
CNSL10/16/2023Searchlight Capital Partners and British Columbia Investment Management Corporation (N/A)$4.70$4.10501/15/202514.49%11.76%
AMTI09/21/2023Cyclo Therapeutics, Inc. (CYTH)$0.16$0.141912/31/202314.04%74.26%
PNM10/21/2020Avangrid, Inc. (AGR)$50.30$44.712/31/202312.53%66.27%

Deals In The Works

Seven new potential Merger Arbitrage deals were added to the ‘Deals In The Works‘ section last week.

  1. October 16, 2023: According to Bloomberg, Prothena Corp. (PRTA), which is developing a closely-watched treatment for Alzheimer’s disease, is preparing for a potential sale.
  2. October 16, 2023: According to Bloomberg, Elliott Investment Management is considering making a proposal to take supply-chain software company E2open Parent Holdings Inc. (ETWO) private.
  3. October 16, 2023: According to Bloomberg, Engine Capital is urging pipe, valves and fittings distributor MRC Global Inc. (MRC) to consider exploring a sale.
  4. October 17, 2023: According to Reuters, U.S. natural gas producer Chesapeake Energy Corp. (CHK) has approached Southwestern Energy (SWN), a peer valued by the stock market at $12 billion including debt, about a potential acquisition.
  5. October 18, 2023: According to a 13D filing, Syncona Portfolio Limited disclosed a non-binding proposal to acquire Freeline Therapeutics (FRLN) for $5 per ADS in an all-cash deal.
  6. October 19, 2023: According to a proxy filing, the Summit Materials (SUM) board received a revised proposal from unidentified Company A to acquire the company for $38 per share.
  7. October 20, 2023: According to Bloomberg, Jazz Pharmaceuticals Plc (JAZZ) is exploring strategic options including a potential sale.

Updates:

  1. Wyndham Hotels & Resorts (WH) rejected Choice Hotels International’s (CHH) $9.8 billion takeover offer.
  2. On October 20, 2023, the board of directors of Summit Materials (SUM) received a letter from a representative of Company A withdrawing the revised Company A proposal. Bloomberg reported on Friday that Heidelberg Materials AG is the mystery bidder for Summit Materials Inc. which could potentially upend the US cement maker’s deal for the North American arm of Cementos Argos.

SPAC Arbitrage

Potential SPAC IPOs

  1. On October 19, 2023, Iron Horse Acquisitions Corp. (IROH) re-filed for a downsized SPAC with new underwriters.
  2. On October 19, 2023, Lianfeng Holding Acquisition filed for a $70 million IPO.

Business Combination

  1. On October 13, 2023, Insight Acquisition Corp. (INAQentered into a business combination with Alpha Modus, Corp.
  2. On October 16, 2023, Aimfinity Investment Corp. I (AIMAU) and Docter Inc. entered a definitive merger agreement.
  3. On October 18, 2023, RF Acquisition Corp (RFAC) and Grand Centrex Limited (GCL) entered into a definitive business combination agreement.
  4. On October 20, 2023, Integral Acquisition Corporation 1 (INTEentered into a definitive business combination agreement with Flybondi Limited (FLYB).

Completed

  1. On October 19, 2023, Athena Consumer (ACAQ) and TopCo (EGOX) announced the completion of their previously announced business combination.
  2. On October 19, 2023, Perception Capital Corp. II (PCCT) and Spectaire Holdings Inc. (SPECannounced the completion of their business combination.

Terminated

  1. On October 20, 2023, Canna-Global Acquisition Corp (CNGL) and New Quantum Holdings announced the termination of their business combination.

List of all pending Merger Arbitrage deals:

Disclaimer: I hold a long position in Spirit Airlines (SAVE). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.