Poseidon Acquisition Corp has increased its buyout offer for the New York-listed asset manager Atlas Corporation, the parent of the world’s largest containership lessor, Seaspan.
The consortium composed of Japanese liner operator Ocean Network Express (ONE), Atlas chairman David L. Sokol, certain affiliates of Fairfax Financial Holdings and the Washington family is ready to pay $15.50 per share in cash to acquire all of the outstanding common shares of Atlas that it does not already own or control, up from its initial offer of $14.45 in August.
Fairfax, Washington and Sokol collectively own more than 50% of Atlas’ outstanding common shares. Sokol said the increased bid price would be Poseidon’s final and best offer.
In a letter to Atlas’ special committee of independent directors, formed in August to evaluate the bid to take Atlas private, Poseidon said the financial markets have deteriorated significantly since it made its proposal on August 4, with the share prices of Atlas’ closest peers in the containership leasing sector, Costamare, Global Ship Lease and Danaos, dropping by 15.9%, 17.4% and 21.8%, respectively, over the same period.
Citing Alphaliner data from August, the consortium warned that Cosco, Yang Ming and ONE, Atlas’ top three customers which contribute over 60% of its annual revenue, have in aggregate over 1m teu of capacity across 68 on-order vessels and that if demand continues to soften, they may utilise their own vessels rather than in-charter to manage capacity needs.
It also pointed out that vessel charter rates continue to decline as the world recovers from covid and recent supply chain disruptions, with the Shanghai Containerised Freight Index down 45% from when the initial offer was made. The letter cautioned that as container freight rates fall, liners and freight forwarders may not be able to cover vessel charter commitments, which may in turn result in re-negotiations or cancellations with containership lessors, as experienced by one of Atlas’ peers in August 2022.
“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,” Poseidon Acquisition Corp said.