Buyout bid increased for Seaspan’s parent
Atlas Corporation, the owner of the world’s largest lessor of containerships, Seaspan Corporation, has received an increased bid for all of its outstanding shares from the Poseidon Acquisition Corp.
The consortium, composed of David L. Sokol, Chairman of the Board of Directors of Atlas Corp., affiliates of Fairfax Financial Holdings, the Washington Family, and Ocean Network Express, increased its bit to $15.50 per share in cash or $4.4 billion in total.
Poseidon Chairman David L. Sokol stated that the increased bid price represents the consortium’s final and best offer. The non-binding proposal was conveyed on September 26, 2022 in a letter to Atlas’ Special Committee.
The move follows on the back of a bid made by the consortium in August this year which offered $14.45 per share in cash.
“In an effort to reach a conclusion and bring certainty to Atlas and its shareholders, we are hereby increasing our offer from $14.45 to $15.50 per common share.
“It is our hope that in light of this significant increase in value, the Special Committee will conclude that this transaction represents full, fair and certain value and is in the best interest of Atlas shareholders. If the Special Committee concludes otherwise, we will withdraw our proposal. We do believe that Atlas shareholders are amenable to a transaction and would want the opportunity to consider this proposal for themselves. It is our hope and preference to work constructively with the Special Committee to allow them to do as such,” the Poseidon Acquisition Corp said in the letter.
The consortium added that since its initial bid, the financial markets deteriorated significantly, pushing down share prices of Atlas’ closest peers in the containership leasing sector. Shares of Costamare, Global Ship Lease, and Danaos, have fallen by 15.9%, 17.4% and 21.8%, respectively, over the same period.
Seeing that Atlas’ cost of capital has risen significantly alongside the current rising interest rate environment, the consortium urged the committee to “carefully consider the implications of the prevailing macroeconomic weakness and rising cost of capital on Atlas’ business, cash flows and valuation.”
The letter further added that with the latest charter rate decline, record vessel deliveries and impending investments to meet IMO regulations Atlas would be subjected to considerable market pressure.
“In line with the International Maritime Organization’s strategic initiatives to reduce greenhouse gas emissions from vessels by at least 70% from 2008 levels by 2050, we expect Atlas to continually incur substantial capital expenditure in vessel refurbishment or replacement. Atlas’ vessels may turn obsolete well ahead of the currently envisaged useful lives, thereby adversely impacting Atlas’ expected return on investment and value vis-à-vis the company’s current business plan,” the letter said.
“In conclusion, we reaffirm our belief that Atlas would be able to navigate the industry headwinds more nimbly as a private platform, with greater stability and scale through the addition of ONE as a strategic shareholder and partner. We look forward to a favorable and timely response to our proposal.”
The consortium already controls approximately 68 percent of the fully-diluted outstanding common shares of Atlas.
Seaspan’s operating fleet consists of 127 vessels with a total capacity of 1.1 million TEU and an additional 63 vessels under construction. With the latest contract termination for four LNG-powered newbuilds, these now include 25 LNG-fuelled vessels.