BY Richard Summerfield
WillScot Mobile Mini Holdings Corp has agreed to acquire McGrath RentCorp in a deal worth $3.8bn. The deal is expected to close in the second quarter of 2024, subject to approval by McGrath shareholders, regulatory approvals and other customary closing conditions.
Under the terms of the transaction, McGrath shareholders will receive either $123 in cash or 2.8211 shares of WillScot common stock per McGrath share they hold. Sixty percent of McGrath’s outstanding shares will be converted into the cash consideration and the remaining 40 percent converted into the stock consideration. The transaction values McGrath at an enterprise value of $3.8bn, including approximately $800m of net debt, and the per-share consideration represents a premium of 10.1 percent to McGrath’s closing stock price on 26 January 2024, the last day of trading before the deal was announced.
“I’m excited to welcome the McGrath team to the WillScot Mobile Mini family,” said Brad Soultz, chief executive of WillScot Mobile Mini. “The transaction will further accelerate our growth, with combined 2023 pro forma revenue of $3.2 billion and adjusted EBITDA of $1.4 billion, we will be on path to achieve a $700 million free cash flow run-rate twelve months after we close. Meanwhile, our $1 billion of idiosyncratic growth levers remain in flight, many of which will increase proportionally with the close of the transaction. Among the abundant stockholder benefits associated with this transaction, I am most excited with the prospect of extending our innovative and expansive Value-Added Products portfolio, and our unique FLEX, Cold Storage and Clearspan Space Solutions to McGrath customers. Our long-term capital allocation framework remains unchanged as we continue to accelerate our robust organic growth with highly accretive M&A, all the while creating long-term value for our shareholders.”
“This combination provides McGrath customers and employees a platform for continued growth and success, while providing McGrath shareholders with immediate cash value as well as participation in the upside potential of the combined company,” said Joseph Hanna, president and chief executive of McGrath. “This transaction validates the strength of our business, the hard work and dedication of our team members and the valuable solutions McGrath provides to our customers. For more than 40 years, we have pursued a relentless customer-centric approach and we look forward to extending our ability to provide the solutions that our customers so highly value.”
According to a statement announcing the deal, the combined company will have a strengthened financial profile, with combined 2023 revenues of $3.2bn and adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $1.4bn, including run-rate operating synergies. The combined company expects to capture additional revenue synergies and fleet efficiencies through its combined commercial and branch operations and by leveraging WillScot’s best-in-class technology platform. WillScot expects the combined company will generate approximately $700m of annual free cash flow by end of the first full year following closing, with significant further accretion to free cash flow margins over time.
News: Portable building firm Willscot Mobile to buy McGrath RentCorp in $3.8 bln deal