Significant synergies and efficiencies to
enhance container supply and customer service platform
Highly accretive transaction – Expected to be
accretive to net income per share by ~30% when savings fully
realized
Triton Container International Limited (“Triton”) and TAL
International Group, Inc. (NYSE:TAL) (“TAL International”) jointly
announced today that they have entered into a definitive agreement
under which the companies will combine in an all-stock merger of
equals transaction. The transaction, which has been unanimously
approved by the Boards of Directors of both companies, will create
the world’s largest lessor of intermodal freight containers with a
combined container fleet of nearly five million twenty-foot
equivalent units (TEU) and revenue earning assets of $8.7
billion.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20151109006824/en/
Under the terms of the transaction agreement, Triton and TAL
International will combine under a newly-formed holding company,
Triton International Limited (“Triton International”), which will
be domiciled in Bermuda and is expected to be listed on the New
York Stock Exchange. Triton shareholders will own 55% of the equity
of the combined company and TAL International shareholders will own
45%. TAL International shareholders will receive one common share
of Triton International for each share of TAL International stock
owned. TAL International shareholders will also receive a special
dividend of $0.54 per share upon closing of the transaction.
Company Backgrounds
Triton was founded in 1980 and is currently owned by Warburg
Pincus LLC and Vestar Capital Partners, along with other private
investors, including members of Triton management. Triton operates
a container fleet of 2.4 million TEU, services its customers
through 19 subsidiary offices in 13 countries and is domiciled in
Bermuda.
TAL International was founded in 1963 and has been publicly
listed since 2005. TAL International operates a container fleet of
2.4 million TEU, services its customers through 17 offices in 11
countries and is domiciled in Delaware.
Transaction Highlights
- A merger of Triton and TAL
International will create the world’s largest and most efficient
intermodal container leasing company with a container fleet of 4.8
million TEU, resulting in industry cost leadership and an enhanced
container supply capability.
- The combined company expects to realize
$40 million per year in annual SG&A synergies, by aligning
infrastructure and creating a best-in-class systems environment.
The cost savings are expected to be fully implemented by the end of
2016.
- The transaction is expected to be
approximately 30% accretive to net income per share for TAL
International’s existing shareholders when cost savings are fully
realized.
- The regional and product line strengths
of Triton and TAL International are highly complementary. The
combined company will offer its customer base a broad range of
container types and will maintain close customer relationships
across all major geographic locations.
- Consummation of the transaction will
not require any incremental leverage and existing debt facilities
at Triton and TAL International will largely remain in place.
- The new company expects to implement an
annual dividend of $1.80 per share and intends to adopt a share
repurchase plan of up to $250 million following the close of the
transaction. The planned share repurchase program will be completed
using the company’s existing liquidity, and will supplant TAL
International’s recently announced $150 million buyback
program.
Ed Schneider, Co-Founder and Chairman of the Board, Triton,
stated, “This transaction will create a company with deep industry
knowledge, enhanced operating and systems capabilities and expanded
fleet size. Both Triton and TAL International have well-earned
reputations for competence and reliability with our customers,
suppliers and capital providers. We are proud of what Triton has
accomplished over the last 35 years and we believe that joining
forces with TAL International is a next logical step in our
evolution. We look forward to bringing together our similar
cultures of dependability, high quality customer service and
teamwork.”
Brian Sondey, President and Chief Executive Officer, TAL
International, stated, “This is a transformational transaction. The
new company’s enhanced capabilities, larger scale and improved cost
competitiveness will better position it in the current soft
operating environment and provide valuable operating leverage when
the market recovers. In addition, our customers will benefit from
significantly expanded supply capabilities, the industry’s best
container build quality and top-tier customer service. Both Triton
and TAL International have delivered industry-leading returns over
the last ten years, and we are very excited to work together to
continue this tradition of success as a larger, stronger, more
profitable company.”
Simon Vernon, President and Chief Executive Officer, Triton,
stated, “Bringing together our two highly compatible companies is a
powerful combination that will deliver a number of compelling
strategic and financial benefits to the stakeholders of both
companies. The product line and customer strengths of Triton and
TAL International are highly complementary, which will allow us to
preserve the core strengths of each company. We also share a strong
commitment to container quality, investment discipline and
operational excellence. Both organizations are focused on making
the integration as seamless as possible for our respective
customers and suppliers. TAL International will be an excellent
partner for us and we are looking forward to bringing these two
outstanding companies together.”
Financial Highlights
The following table summarizes the historical financial
highlights for Triton and TAL International as of and for the
twelve months ended September 30, 2015 (dollars in millions).
TAL
Triton1
International
Combined2
Leasing Revenue $716 $608
$1,324 Adjusted EBITDA 634 568
1,202 Adjusted Pre-Tax Income 176
167 343 Adjusted Net Income 170
109 279 Revenue Earning Assets
4,551 4,126 8,677 Net Debt
3,213 3,137 6,350
_______________________1 Subject to completion of quarterly
reviews by Triton’s external auditors.2 Combined financial data as
of September 30, 2015, before consideration of transaction costs,
synergies, and purchase accounting adjustments.
The combined company expects to achieve $40 million in annual
SG&A synergies upon full integration by the end of 2016, to be
realized through aligning infrastructure and creating a
best-in-class systems environment. No additional leverage is
required to consummate the transaction and existing Triton and TAL
International debt facilities will largely remain in place. Both
companies have significant undrawn financing availability for
liquidity and capital expenditures under their existing credit
facilities.
GAAP purchase accounting adjustments at Triton International
will result in a reduction to the carrying value of certain revenue
earning assets. In addition, a lease intangible asset will be
created to reflect the value of above market lease rates on certain
existing leases. These accounting changes will not impact the
borrowing base availability under the debt facilities of either
Triton or TAL International. These purchase accounting adjustments,
which are non-cash, will likely decrease net income in 2016, be
approximately net income neutral in 2017 and positively impact net
income thereafter.
Management and Board of Directors
Following the completion of the transaction, TAL International’s
President and Chief Executive Officer Brian Sondey will serve as
Chief Executive Officer, Triton’s President and Chief Executive
Officer Simon Vernon will serve as President, and TAL
International’s Chief Financial Officer John Burns will serve as
Chief Financial Officer of the combined company. Triton’s Chairman
Ed Schneider will see the transaction through to close and has
announced that he will then retire.
The newly-formed company will be domiciled in Bermuda and will
continue to have significant operating subsidiaries worldwide.
The Board of Directors of the newly-formed company will
initially be comprised of nine directors. It is expected that three
directors will come from Triton’s existing Board of Directors with
one additional director to be identified by Triton, four will come
from TAL International’s existing Board of Directors, and one new
independent director will be identified by TAL International's
Nominating and Governance Committee after conducting an external
search process. From and after the closing, Warburg Pincus LLC and
Vestar Capital Partners will have the right to designate three of
the nine directors, subject to step down as their ownership
decreases after the closing.
Following the close of the transaction, Warburg Pincus and
Vestar will own approximately 27% and 15%, respectively, of Triton
International. A majority of the Board of Directors will be
independent under New York Stock Exchange standards.
Approvals and Time to Close
The transaction is subject to Triton and TAL International
shareholder approval, regulatory clearances and other customary
closing conditions. Triton shareholders holding Triton common
shares sufficient to approve the transaction on behalf of the
Triton shareholders have agreed to vote in favor of the
transaction. The companies expect to complete the transaction
during the first half of 2016.
Advisors
Wells Fargo Securities is serving as financial advisor to
Triton, and Cleary Gottlieb Steen & Hamilton LLP is serving as
its legal advisor. BofA Merrill Lynch is serving as financial
advisor to TAL International and Skadden, Arps, Slate, Meagher
& Flom LLP and Shearman & Sterling LLP are serving as its
legal advisors.
Investor Conference Call and Webcast
Triton and TAL International will host a joint investor
conference call to discuss the proposed merger tomorrow, November
10, 2015, at 8:00 AM U.S. Eastern Time. To access the call, please
use one of the following dial-in numbers: (866) 547-1509 (toll-free
U.S. and Canada), and (920) 663-6208 (International), and enter the
Conference ID number 75434916. A telephone replay of the call will
be available for 60 days and can be accessed by dialing (800)
585-8367 ((404) 537-3406 international callers). The access code
for the replay is 75434916. An investor presentation will be made
available on Triton’s and TAL International’s websites.
About Triton Container International Limited
Triton is one of the world’s largest lessors of intermodal cargo
containers. Domiciled in Bermuda and with 19 subsidiary offices in
13 countries, Triton has focused on providing exceptional customer
service, designing and maintaining a superior quality fleet and
operating a world-wide, customer-centric infrastructure. Through
its world-wide network of Triton regional service subsidiaries,
agents and depots, and a dedicated, experienced staff, Triton meets
its customers' needs by providing equipment in demand locations at
flexible and competitive lease terms.
About TAL International Group, Inc.
TAL International is one of the world's largest lessors of
intermodal freight containers and chassis with 17 offices in 11
countries and approximately 230 third-party container depot
facilities in 40 countries. TAL International's global operations
include the acquisition, leasing, re-leasing and subsequent sale of
multiple types of intermodal containers and chassis. TAL
International is among the world's largest independent lessors of
intermodal containers and chassis as measured by fleet size.
About Warburg Pincus LLC
Warburg Pincus LLC is a leading global private equity firm
focused on growth investing. The firm has more than $37 billion in
assets under management. The firm’s active portfolio of more than
120 companies is highly diversified by stage, sector and geography.
Warburg Pincus is an experienced partner to management teams
seeking to build durable companies with sustainable value. Founded
in 1966, Warburg Pincus has raised 14 private equity funds, which
have invested more than $50 billion in over 720 companies in more
than 35 countries. The firm is headquartered in New York with
offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London,
Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo and
Shanghai. For more information please visit
www.warburgpincus.com.
About Vestar Capital Partners
Vestar Capital Partners is a leading U.S. middle-market private
equity firm currently managing approximately $5 billion in capital.
Specializing in management buyouts and growth capital investments,
Vestar invests and collaborates with incumbent management teams and
private owners in a creative, flexible and entrepreneurial way to
build long-term enterprise value. Vestar has extensive experience
investing across a wide variety of industries including Consumer,
Healthcare, Diversified Industries, and Financial Services. Since
Vestar’s founding in 1988, Vestar funds have completed 75
investments in companies with a total value of more than $40
billion. For more information, please visit
www.vestarcapital.com.
Forward-Looking Statements
Certain statements included in this press release are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under The Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally are
accompanied by words such as “may”, “should”, “would”, “plan”,
“intend”, “anticipate”, “believe”, “estimate”, “predict”,
“potential”, “seem”, “seek”, “continue”, “future”, “will”,
“expect”, “outlook” or other similar words, phrases or expressions.
These forward-looking statements include statements regarding our
industry, future events, the proposed transaction between Triton
and TAL International, the estimated or anticipated future results
and benefits of Triton and TAL International following the
transaction, including estimated synergies, the likelihood and
ability of the parties to successfully close the proposed
transaction, future opportunities for the combined company, and
other statements that are not historical facts. These statements
are based on the current expectations of Triton and TAL
International management and are not predictions of actual
performance. These statements are subject to a number of risks and
uncertainties regarding Triton’s and TAL International’s respective
businesses and the transaction, and actual results may differ
materially. These risks and uncertainties include, but are not
limited to, changes in the business environment in which Triton and
TAL International operate, including inflation and interest rates,
and general financial, economic, regulatory and political
conditions affecting the industry in which Triton and TAL
International operate; changes in taxes, governmental laws, and
regulations; competitive product and pricing activity; difficulties
of managing growth profitably; the loss of one or more members of
Triton’s or TAL International’s management team; the ability of the
parties to successfully close the proposed transaction, including
the risk that the required regulatory approvals are not obtained,
are delayed or are subject to unanticipated conditions that could
adversely affect the combined company or the expected benefits of
the transaction; failure to realize the anticipated benefits of the
transaction, including as a result of a delay in completing the
transaction or a delay or difficulty in integrating the businesses
of Triton and TAL International; uncertainty as to the long-term
value of Triton International common shares; the expected amount
and timing of cost savings and operating synergies; failure to
receive the approval of the stockholders of Triton and TAL
International for the transaction, and those discussed in TAL
International’s Annual Report on Form 10-K for the year ended
December 31, 2014 under the heading “Risk Factors,” as updated from
time to time by TAL International’s Quarterly Reports on Form 10-Q
and other documents of TAL International on file with the
Securities and Exchange Commission ("SEC") or in the registration
statement on Form S-4 that will be filed with the SEC by Triton
International. There may be additional risks that neither Triton
nor TAL International presently know or that Triton and TAL
International currently believe are immaterial which could also
cause actual results to differ from those contained in the
forward-looking statements. In addition, forward-looking statements
provide Triton’s and TAL International’s expectations, plans or
forecasts of future events and views as of the date of this press
release. Triton and TAL International anticipate that subsequent
events and developments will cause Triton’s and TAL International’s
assessments to change. However, while Triton and TAL International
may elect to update these forward-looking statements at some point
in the future, Triton and TAL International specifically disclaim
any obligation to do so. These forward-looking statements should
not be relied upon as representing Triton’s and TAL International’s
assessments as of any date subsequent to the date of this press
release.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information
This communication is not a solicitation of a proxy from any
stockholder of TAL International. In connection with the proposed
transaction, Triton International will file with the SEC a
registration statement on Form S-4 that will constitute a
prospectus of Triton International and include a proxy statement of
TAL International. TAL International will mail the proxy
statement/prospectus to stockholders. INVESTORS ARE URGED TO READ
THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain the
proxy statement/prospectus, as well as other filings containing
information about TAL International free of charge, at the website
maintained by the SEC at www.sec.gov. Copies of the proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the proxy statement/prospectus can
also be obtained, free of charge, by directing a request to TAL
International Group, Inc., 100 Manhattanville Road, Purchase, New
York 10577, Attention: Secretary.
The respective directors and executive officers of Triton, TAL
International and Triton International and other persons may be
deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information regarding TAL
International’s directors and executive officers is available in
its proxy statement filed with the SEC on March 19, 2015. These
documents can be obtained free of charge from the sources indicated
above. Other information regarding the participants in the proxy
solicitation and their respective interests will be included in the
proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151109006824/en/
Investors:TritonSteve Controulis,
415-956-6311Senior Vice President & Chief Financial
OfficerorTAL InternationalJohn Burns, 914-697-2877Senior
Vice President & Chief Financial OfficerorMedia:Sard
Verbinnen & CoDenise DesChenes/Ron Low/Pamela Blum,
212-687-8080
Tal Education (NYSE:TAL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tal Education (NYSE:TAL)
Historical Stock Chart
From Apr 2023 to Apr 2024