Modular office space provider WillScott Mobile Mini agreed to buy B2B leasing company McGrath RentCorp in cash plus shares, valuing the latter at $3.8 billion.
The Zhitong Finance App learned that modular office space provider WillScott Mobile Mini (WSC.US) agreed to acquire B2B leasing company McGrath RentCorp (MGRC.US) in cash plus shares, valuing the latter at 3.8 billion US dollars. According to reports, McGrath shareholders will receive $123 in cash or 2.8211 common shares of WillScott Mobile Mini per share. The purchase price was a 10.1% premium over McGrath's closing price last Friday. Affected by this news, McGrath rose nearly 10% before the US stock market on Monday, while WillScott Mobile Mini fell more than 1%.
According to the agreement, 60% of McGrath's tradable shares will be converted to cash consideration and 40% of the tradable shares will be converted to stock consideration. The agreement also provided McGrath shareholders with approximately 12.6% ownership of the consolidated company. Subject to McGrath shareholders' approval, regulatory approval, and other customary closing conditions, the deal is expected to close in the second quarter of 2024.
WillScott Mobile Mini anticipates that the merged company will generate approximately $700 million in annual free cash flow at the end of the first full year after the transaction is completed, and the free cash flow margin will increase significantly further over time. The company anticipates that the consolidated financial position of the company will also be strengthened.
According to the data, WillScott Mobile Mini specializes in innovative flexible workspace and portable storage solutions, and derives most of its revenue from the modular solutions business. The company serves the fields of furniture leasing, transportation and logistics, facility management, site services, commercial warehousing, and commercial real estate.
McGrath is comprised of four business divisions, including the Modular Buildings and Portable Storage Division (Mobile Modular), the Electronic Test Equipment Division (TRS-Rentelco), the Containment Solutions Division (Adler Tanks) for the storage of hazardous and non-hazardous liquids and solids, and the Classroom Manufacturing Division (Enviroplex), which sells modular classrooms in California. The company's revenue mainly comes from leasing equipment for operating leases and equipment sales that occur in the normal course of business.