In a surprise development after the close of the stock market today, an investment group calling itself Poseidon Acquisition Corp. led by the largest investors in Atlas Corp. along with Ocean Network Express (ONE) launched a bid to take the company private. Atlas is the parent company of the Seaspan, one of the leading owner-charters of containerships to the world’s leading shipping companies.
With a fleet of 130 containerships and an additional 70 on over representing a total capacity of nearly 2 million TEU, Seaspan would be the fifth largest carrier in Alphaliner’s ranking ahead of companies including Hapag-Lloyd, Evergreen, and ONE. Seaspan, however, has its fleet of vessels mostly on long-term charters to major carriers including MSC, COSCO, Maersk, CMA CGM, ONE, Zim, and others. The company reported last quarter a 98.5 percent utilization rate for its fleet. Seaspan building on its long-term relationships with these shipping companies last year placed orders that will nearly double the capacity of its containership fleet.
“The consortium believes the proposed transaction will provide Atlas’s common shareholders with immediate liquidity and certainty of value at a significant premium to the current share price, while allowing Atlas to focus on the long term without the emphasis on short-term results and providing Atlas with an ideal strategic partner to support its future growth,” said David Sokol, Chairman of the Board of Directors of Atlas and a member of the consortium making the offer for the company.
Sokol along with Fairfax Financial Holdings Limited and the Washington Family currently own or control approximately 68 percent of the fully-diluted outstanding common shares of Atlas. Fairfax in April exercised warrants it held since 2018 entitling it to buy an additional 25 million shares of Atlas at $8.05 per share. Following the exercise of the warrants, Fairfax and its affiliates hold in aggregate approximately 124.8 million common shares, representing 45 percent of the outstanding common shares of Atlas, increased from 39.6 percent. Fairfax holds an additional 6 million warrants.
Under the proposed terms, the group is offering $14.45 per share in cash, a better than 30 percent premium over the 30-day trading average for the stock, for the 32 percent of the company they do not currently control. It is contemplated that all Atlas preferred shares would remain outstanding following the proposed transaction. Fairfax, the Washington Family, and David Sokol wrote to the board of directors that they would continue their ownership in Atlas as part of the consortium and that they have no interest in selling any of the shares they own or control.
Poseidon asks the board to form a special committee of independent directors to consider the proposal and accept or negotiate the final terms of the offer. If the special committee does not approve, or the other common shareholders of Atlas do not approve, the proposed transaction, Fairfax, the Washington Family, and David Sokol presently intend to continue as long-term shareholders of Atlas.
In addition to ownership of Seaspan, Atlas also owns APR Energy, a provider of mobile power generation. The company offers turnkey power plants that help run cities, countries, and industries around the world focusing especially on underserved markets and industries. Unlike Seaspan which is very profitable and provides consistency to the earnings, APR is a smaller operation that has reported wide swings in financial results. Currently, while providing funds from operations, APR is not profitable on a GAAP basis.
Poseidon in its initial announcement did not provide insights if it had plans to maintain Atlas’s current strategy and structure if it is successful in taking the company private. ONE did not immediately comment on its participation in the group. Shares of Atlas closed the trading day at $11.57, but quickly rose to $14.26 in after hours trading after news of the take private offer was announced.