CAI International (CAI) stock soared 45 percent on Friday after the transportation equipment finance company agreed to be bought for $2.9 billion. CAI has been acquired by Mitsubishi HC Capital for $56 in cash per share, a considerable premium over the company’s Thursday closing.
CAI’s main activity is leasing heavy equipment to shipping and transportation companies, especially intermodal shipping containers and railcars. The global pandemic and a faster-than-expected recovery have thrown off shipping lines, making containers scarce, resulting in increased demand for CAI’s products.
It’s a business where size matters, and by partnering with Mitsubishi, CAI would become a much bigger participant. CAI’s equity is valued at $1.1 billion under the terms of the agreement, with Mitsubishi also taking on $1.8 billion in CAI debt.
Mitsubishi has been a market consolidator. Mitsubishi UFJ Lease bought Hitachi Capital last fall and renamed it Mitsubishi HC Capital after the acquisition finalized.
CAI Chairman David Remington said in a statement that the transaction represents the culmination of conversations that began in 2019, calling the sale “in the long-term best interests of our shareholders”
“We believe our shipping line customers and manufacturing partners will most certainly benefit from the scale and financial strength of the merged company.”
CAI Chairman – David Remington
The market is pricing CAI shares just below the $56 takeout price, signaling that the sale will close and no higher bidder will emerge, according to common thinking. That, I believe, is the fair expectation, and current owners should expect to receive cash later this year.
