Container leasing company CAI International Inc. has been acquired for $1.1 billion by Mitsubishi HC Capital Inc. (MHC) in a move that creates a global powerhouse in the sector at a time when shipping containers are in short supply, the companies said today.
MHC itself is a new name in the logistics sector, having been formed in April through the merger of Mitsubishi UFJ Lease and Finance Ltd. and Hitachi Capital Corp., resulting in a combined company with total assets of $89 billion that stands as the second largest leasing company in Japan.
Despite its young age, MHC has ambitious plans for growth, since it already owns the sector’s 6th largest container leaser, Beacon Intermodal Leasing LLC (BIL) and its 1.5 million twenty-foot equivalent units (TEUs) of shipping containers. It will now add CAI’s global fleet of 1.8 million TEUs to that stable, as well as its 13 offices located in 12 countries.
The merger comes at a time when container shortages and high shipping rates are disrupting typical maritime import and export patterns. That pressure has been exerted by a combination of pandemic economic shutdowns and rebounds, the traffic jam in the Suez Canal, and most recently, the partial closure of China’s Yantian port by another Covid-19 outbreak.
MHC also pointed to those business conditions, saying its rationale for making the transaction was a forecast of stable demand for marine container leasing for years to come.
"Marine transportation is strongly tied between key infrastructure for livelihood and industry activities, indicating that containers used for marine transportation are expected to benefit from stable demands in the leasing market,” MHC said in a release. “Furthermore, as the demands for marine containers has been on the rise along with increasing cargo volumes associated with the expanding stay-at-home demand under the Covid-19 pandemic, such circumstances have led to a shortage of containers. The marine container leasing business is expected to bring stable growth as an indispensable infrastructure of global trade, and is envisioned to be a leading force of the logistic business domain in the future.”
The transaction is expected to close in the late third quarter or early fourth quarter of 2021, subject to customary closing conditions. Once the deal is complete, MHC expects to retain CAI’s existing management team and employees, and to keep its headquarters in San Francisco.
The acquisition follows CAI’s efforts to make corporate changes to return its focus to its core container leasing business, CAI President and CEO Timothy Page said in a release. In 2020, CAI International sold CAI Logistics, its non-asset logistics division, to third-party logistics (3PL) services provider NFI.
“This merger is the culmination of discussions that started in Fall of 2019,” David Remington, chairman of CAI’s board of directors, said in a release. “During those discussions we have been most impressed by the vision of MHC, a vision shared by Hiromitsu Ogawa, who founded CAI over 30 years ago. Mr. Ogawa built a world class container leasing company by focusing on delivering value to customers and we are pleased that this vision will endure. We believe our shipping line customers and manufacturing partners will most certainly benefit from the scale and financial strength of the merged company.”