Brookfield Infrastructure to buy Triton in $13.3B cash and stock deal

Maksim Labkouski

Triton International (NYSE:TRTN) +28.6% pre-market Wednesday after Brookfield Infrastructure Partners (NYSE:BIP) agreed to acquire the world's largest lessor of intermodal freight containers in a cash and stock deal valued at $13.3B.

Triton (TRTN) common shareholders will receive consideration valued at $85/share, including $68.50 in cash and $16.50 in Brookfield (BIP) class A shares.

The deal price represents a 35% premium to Triton's (TRTN) closing share price on April 11.

Brookfield (BIP) said it aims to "maintain Triton's existing investment grade capital structure, uphold the highest operating and customer service standards for the benefit of Triton's customers and stakeholders, and help grow the business, aided by Brookfield Infrastructure's substantial access to long-term private capital."

Brookfield Infrastructure Partners' (BIP) further growth is squeezed by growing incentive distributions and higher interest rates, Alexander Steinberg writes in an analysis posted recently on Seeking Alpha.

Comments

[JrMastermind]

Congrats to the people who are making out on this deal! As for BIPC, I fear this is a poorly timed acquisition.

[Cxb16544]

What i found out about preferreds from titon👇👇
I just got off the phone with Andrew Kohl from Triton investor relations. He claims the preferred's will continue to trade as they are. And i asked about brook field running up debt & not paying out. He said while anything can happen, brookfield, he claimed, can not access triton funds until preferreds are paid. And a release should be forthcoming. I questioned the selloff- and he said he was surprised to see such a selloff. And the prospectus states the above. Not what you find on Quantumonline, but the full prospectus. Feel free to call investor relAtions. 914-697-2537 good luck.

[option2020put]

@Cxb16544 ...shot first, ask questions later. Refer to the pfd registration statement. Deep pocket investors were the original holders, which might explain the friendly shareholder conditions. Additionally, company insiders may have a large pfd. position.

[Cxb16544]

Doesn't BIPC pay in CAD? Their dividend. Check the exchange rate.... big difference!

[Matthew Brown]

@Cxb16544 I believe all Brookfield dividends are paid in $US

[surfgeezer]

Interestingly it's cash and BIPC shares, with no BIP. I don't remember any deals with just one accumulating something since the split of BIPC from BIP. This will mean Earnings calls will be split now and DGR should diverge.
BIPC had about 20% "non div/ROC" and Qualified - Canada's 15% tax whereas TRTN was all Qualified. BIPC had a lower yield but better DGR than TRTN. I had not DRIP'd TRTN or BIPC for quite some while, since the yields are low. Also why I prefer BIP.

[Cxb16544]

I figured, guess i was wrong, some of these authors would tell people about the preferred's! We all know about the buyout, we don't need more stories on that!!!!!!!!! I called a friend in wealth management and he gave me the name and number in investor relations at TRITON! I just called. 5:45 eastern standard time and got his voice mail.

Here's his name and number for all to call.

ANDREW KOHL
INVESTOR RELATIONS TRITON
914-697-2537

Whomever finds out first kindly let us all know! Thank you! I dumped some but still have several thousand left. And i am none to happy! I could not find definitive answer in prospectus.

[mrrobert2u]

@Cxb16544 thanks for the contact; i called and just got voicemail. they must be out celebrating

[Investment Pancake]

I started out as an investor in TAL, and did pretty well after the TRTN merger. Unfortunately, had to sell our TRTN shares a few years back because in Portugal, Bermuda is considered a tax haven and stocks of Bermuda companies are subject to punitive taxes on dividends. I was sorry to let those shares go, but that was a cost of moving to Portugal.

Congratulations to the TRTN longs out there - particularly those who bought into the business through TAL. Between the cap gains and the dividends (hopefully reinvested into more shares), there should be a whole lot of smiling faces for long-term shareholders tonight!

[RoseNose]

@Investment Pancake : You are indeed very right and this is a nice comment. The buy out is deeply pleasing or should be to all!

[Investment Pancake]

@RoseNose Well, I got an interest in shipping containers during the 2009 financial crisis. The idea of claiming depreciation tax deductions on virtually indestructible steel boxes seemed pretty nifty and the market just didn't seem to really get the picture on how profitable it can be to buy containers, lease them back, and collect tax-deferred payments to hand out to eager and appreciative shareholders such as ourselves!

Alas, my foray into shipping containers included what I saw as a wonderful company - Navios Maritime Partners (a very expensive education I hope never to repeat). TAL, however, more than made up for my poor performance with NMM (which to be honest is more about container ships than containers).

Are you thinking about reallocating to Maersk or other container leasing companies? TRTN was pretty fantastic thanks to a relatively simple corporate structure and narrow business focus (helped along vastly by the fact that Brian Sondey was at the helm of both TAL and TRTN). Not sure other shipping container businesses are as well run as TRTN.

Maybe the buyout is somewhat bittersweet for some shareholders - nobody will moan about a nice 35% windfall but the problem is where to reallocate the capital? I just don't know if it will be possible to fully replicate TRTN in terms of corporate quality.

Congratulations, again!

[jaxgab]

@Investment Pancake TRTN has been 5% of my portfolio for a very long time. I'm actually disappointed I'll need to allocate that money to another ticker.

[frcostas]

Is it a good idea to hold on to Prefereds?

[millionairemindset]

@frcostas this is a very good question. Not sure if someone here has the answer try reaching out to investor relations.

[hc351]

It was a good run and a good ending. I applaud the management.

[LoStInvestor]

An infrastructure company going private at a fair valuation that doesn't rip off shareholders, I've seen it all at this point! Would have been happy to continue holding but also not upset to get paid off at a fair premium.

[AlexPortfolio]

Will Triton pay any dividend in the next quarters? Thanks

[Alltime High]

@AlexPortfolio Prior to closing, Triton intends to maintain its current quarterly dividend on the Triton common shares. Upon the closing of the transaction, Triton's common shares will be delisted from the New York Stock Exchange. Triton's Series A-E cumulative redeemable perpetual preference shares will remain outstanding. -> that means we´ll get 85 USD + 2x 0,70 USD until the transaction is expected to close in the fourth quarter of 2023

[AlexPortfolio]

@Alltime High thank you! Have a good day

[Stynx]

I first bot TAL in 2013, enjoyed the merger with Triton in 2017 and first bot BIP in 2016 so this is a match made in heaven from my perspective!
BIP's dividend growth isn't that great but their portfolio of investments is fairly recession-proof.
I prefer BIP to BIP-C so I'm not sure yet if that issue is ironed out.

Stickman.

[Franchiseguy]

Any idea on how fast a transaction like this would take?

[personal_investor]

@Franchiseguy Per the press release, the close is expected in Q4 2023

[Franchiseguy]

@russian_guy2010 Thank you, I guess I was lazy and didnt look at the full release.

[michi1711]

Shit. It is a good company. One fantastic stock less.

[Dave's stocks]

@michi1711 What's your next favorite?

[Investment Pancake]

@michi1711 Brookfield isn't such a bad company to hold either. They have a wonderful portfolio and when it comes to real assets and infrastructure, they're astonishing asset allocators. I mean, evidence the fact that they're adding a high quality name like TRTN to their portfolio.
For fun, I suggest you open a very long-term chart of Brookfield Asset Management. That too might shed some light on why owning Brookfield as a long-term asset can be pretty fun.

[michi1711]

@Dave's stocks Parex Resources is one of my favorites. In addition, I bought a small $NMM Position. It is a dog, yes. But, hopefully a very fine company in mud 2024 after lowering their debt.

[perling]

odd ball
what happens to trtn preferreds

[slee12dent1]

@perling I think a combined company is finacially weaker compared to the the old TRTN.. so I guess the market is pricing in a dividend cut?

[millionairemindset]

@perling I looked at the prospectus and couldn't figure it out 100%. it seems that as long as they keep the preferred listed they stop us from converting, which is bull. I would reach out to investor relations.

[dividend_rookie]

Can anyone help what does it mean for a shareholder?

[Nikolaos Sismanis]

@Mr_rookie That you made a lot of money today. You can either sell now or wait till you get the cash + some BIP stock for slightly more upside ahead.

[jaxgab]

I will never own any Brookfield securities because I absolutely detest Brookfield management and their style. This was my post dated 09/06/2020:

I personally have little respect for Brookfield management, because I watched the nonsense they played while merging with TOO (Teekay Offshore Partners LP) earlier this year. It has been typical practice for unethical management to cut/eliminate the distribution of an MLP like TOO, which occurred during 2019 and crushed the price of the TOO units. BBU (Brookfield Business Partners) then conveniently merged with TOO at a steeply reduced price, effectively stealing the company from the other TOO unit-holders.

So a quick review of the facts in retrospect. BBU buys a 60% stake in TOO on 07/26/2017, when TOO is trading at $ 2.58 per unit. During the next two years + 3 months, BBU proceeds to eliminate the TOO distribution entirely and so the TOO units get crushed (not a surprise!), with TOO trading at only $ 1.16 on 09/30/2019 (down 55%). On 10/01/2019, BBU decides to conveniently step in and a BBU/TOO merger is announced at $ 1.55 per unit (cash), with the press release claiming the TOO cash offer is a premium price (?).

I personally stay far away from management like Brookfield, because companies like this aren't ethical in my book. Take notice that Brookfield has conveniently structured their companies so that you can only purchase non-voting limited partnership units, which shouldn't be a surprise to any investor.

[Chalmus0]

@jaxgab Perhaps you are not aware of concepts like "capitalism" and "fiduciary duty to shareholders/owners", but Brookfield excels at both, and they have rewarded shareholders/unitholders very handsomely for many many years. They really shine in buying out distressed stocks/companies, rehabbing them, and then either keeping them or selling them off for a profit. I mean, let's be honest -- your example was "they bought 60% of a company and then ran managed it in their (Brookfield's) best interest". Well yeah, as a Brookfield shareholder, I would certainly expect them to run things in my best interest. Once someone owns >50% of a company, I hate to tell you, but those other 40% have no power.

If you want voting stock, buy the parent company.

[Iggy_de_la_Varga]

@jaxgab if you are a TRTN shareholder then the choice is easy- sell

but TOO was in pretty poor shape as their mkt was poor at the time, so that was a way different set-up than this deal

that said, you missed some key points like BBU, after acquiring TOO, issued TOO (which changed name to altera) an usury ~14% bond or something and (if I recall correctly) raised fees as well so they did suck cash out of TOO. Which led TOO/Altera to eventually suspend the preferred dividend, and eventually go BK

so that does point to the harsh outcome of TOO shareholders at BBU expense but BIP buying TRTN is a far different deal- BIP is paying a big premium for a tanker who is currently doing well, and BIP has a vastly different business model from BBU (BBU is like private equity, BIP an infrastructure fund) so I would not consider the TOO buyout relevant to this deal

this deal could be a plus for TRTN as it may allow them to access cheaper cost of capitol, and its likely BIP will steward TRTN with an eye to building the value of their business, given BIP's business model of recycling assets (i.e. buy assets cheap, build up, sell for profit, and use proceeds to buy something else cheap)

now, as to whether the TRTN preferreds are likely to stay listed (the main risk to TRTN preferred shareholders (given BIP's likely goal of building TRTN's equity would support the preferreds) which, as they are selling off today, are becoming more "interesting"), Tigerbonds comment below is a good place to start- i.e. their preferred prospectus sounds like it has some decent protection against delisting...so this deal is interesting to me, from the perspective of not owning any TRTNbut considering the preferreds

I'll also note the BPY preferreds (BAM bought out BPY) also remain listed, a positive precedent for Brookfield not delisting the TRTN preferreds?

hmm

[jaxgab]

@Chalmus0 Spoken like a true cut-throat capitalist.

If I am a TOO minority shareholder, TOO management still has a responsibility to me and it's unethical for them to unfairly enrich Brookfield. I've always been disappointed there wasn't a class action suit by the minority TOO shareholders against the TOO board of directors, if only to highlight Brookfield's unscrupulous/illegal behavior.

You try to justify that behavior by claiming "I would certainly expect them to run things in my best interest" and "those 40% have no power". Sorry, but management is supposed to be acting with good faith business judgment in the best interests of the corporation [not the majority shareholder].

www.generalcounsellaw.com/...

[Another Mountain's Rock Investing]

Wow! Not how I expected this to end.

[Lorem Ipsum DSA]

More fees to BN... They are the main beneficiary here.

[Wall59]

I have been invested in BIPC since its initial offering over 3 years ago, and very satisfied with the performance. The enthusiasm and success for BIPC caught many investors by surprise. Never underestimate the large following of Asset Managers and Funds who are either restricted, or just plain avoid stocks like BIP with a K-1 Tax Structure. Staying Long BIPC⭐️

[jculley]

Like others, I also own a truckload of the pfd.C series. What happens to them?