April 12, 2023
Brookfield Infrastructure Making Triton part of its world
Our view: We believe the proposed acquisition of Triton represents another example of how BIP is well-positioned to take advantage of protracted market weakness with our initial analysis indicating an FFO/unit accretion of 6-8%. Further, we like BIP's use of premium-valued BIPC shares as a way to fund investment opportunities, and we expect this will continue over time.
Key points:
Agreement to acquire Triton International. BIP and its institutional partners have agreed to acquire Triton International (NYSE: TRTN) for $85.00 per share, which values Triton at approximately $4.7 billion in equity with an enterprise value of $13.3 billion. BIP expects to close the transaction in Q4/23, subject to customary closing conditions, including approval by Triton’s shareholders and receipt of required regulatory approvals. The transaction has been unanimously approved and recommended by the Board of Directors of Triton.
BIP's equity investment of roughly $1 billion to be largely funded by issuing premium-valued BIPC shares to Triton shareholders. The consideration will consist of $68.50 in cash and $16.50 in BIPC shares. At closing, BIP anticipates that its equity investment will be approximately $1 billion, primarily consisting of the issuance of between 18.4 million to 21.3 million of BIPC shares issued directly to Triton shareholders as part of the transaction. The cash component will largely be funded by the institutional partners with BIP contributing roughly $100 million in cash to fund the deal. We expect BIP's ownership in Triton will be roughly 20-25% with its institutional partners owning the remainder.
Potentially highly accretive to BIP's FFO/unit. Our initial analysis suggests that the deal has the potential to be 6-8% accretive to BIP's FFO/unit depending on Triton's FFO growth following strong results in 2022 that benefited from favourable global supply chain conditions with a more modest AFFO/unit accretion due to Triton's relatively high replacement capex profile.
High utilization and cash generative freight leasing business. Triton is the world’s largest owner and lessor of intermodal containers and is a provider of transportation logistics infrastructure supporting global supply chains. BIP intends to work with the existing management team, while also noting its intention to maintain Triton’s existing investment grade capital structure and grow the business, aided by BIP's access to long-term private capital. Of note, following the announcement of the acquisition, S&P stated that it expects to increase Triton's credit rating to BBB (up from BBB-) when the transaction closes. Please see Exhibits 1 and 2 for details on Triton's revenue by product and a map of operations.