Textainer moves for Seaco

Last week Bloomberg and other news agencies reported that Textainer is in “advanced talks” to buy Seaco Global. Seaco is owned by Bohai Leasing Co, which is part of China’s HNA Group.

The sale of Seaco has been an on-again-off-again prospect for several years now, but this time there is said to be more than one bidder. Bloomberg said Textainer has “pulled ahead” of other bidders with a transaction that values Seaco at over US$5 billion, including debt.

Textainer is now owned by Stonepeak, a US private equity fund that bills itself as a “leading alternative investment firm”. When that transaction closed in March 2024 the Textainer fleet stood at just over 4m TEU of containers and it now sits at 4.29m TEU. This puts Textainer in second place in the leasing company ranking by size, behind Triton’s 7m TEU fleet. Seaco is the fifth largest container leasing company with a fleet of around 2.4m TEU at the end of 2023. Florens is the third largest player with a fleet of around 3.9m TEU and the merged Beacon/CAI is fourth with around 3.3m TEU. The only other leasing company with a fleet over 1m TEU is Seacube, with around 1.2m TEU.

Acquiring Seaco would boost the Textainer fleet to 6.7m TEU, only just behind Triton. When the value of the fleet by “CEU” (Cost Equivalent Unit, a leasing industry measure based on the approximate cost of a container relative to the cost of a standard 20’ dry freight container) Textainer may actually have a slightly higher fleet value. As reported by Textainer in May 2023 Triton’s fleet size by CEU represented 26% of the market, with the combined Textainer and Seaco adding to 27%.

The acquisition would leave the leasing industry with five main players with a fleet of over 1m TEU controlling over 90% of the market. Between them Triton and Textainer would control over 50% of the global leasing fleet of containers.

Whether this is acceptable to regulators is not known, but the level of concentration in the container leasing industry must be of some concern to competition authorities. The US Antitrust Division of the US Department of Justice uses the “Herfindahl–Hirschman Index” (HHI) to measure market concentration. This measures market concentration on a scale from zero to 10,000 by adding the square of all companies competing in the market. The fewer players in the market and the higher their market share, the higher the HHI score.

A market with an HHI between 1,000 and 1,800 points is considered to be moderately concentrated, and an HHI over 1,800 points is regarded as “highly concentrated”.  Based on disclosed fleet size figures WorldCargo News believes the box leasing industry would move above an 1,800 HHI score and into the zone for a “highly concentrated” market if Textainer acquired Seaco.

At the same time, however, the market is not so concentrated that Textainer would have a market share over the 30% threshold, another key metric used by the US Antitrust Division. It should be noted that market concentration and competition is a complicated regulatory issue and WorldCargo News is not trying to predict the outcome of any regulatory investigation, but it is highly likely the container leasing industry has reached the point where a large acquisition/merger has become a regulatory concern.