Mega takeover deal in the US building container market

Last Updated: 30. Januar 2024By

A mega acquisition deal was announced at the beginning of the week in the US market for temporary space solutions. The leading US building container rental company, WillScot Mobile Mini Holdings Corp., announced on Monday that it plans to acquire the smaller competitor, McGrath RentCorp.

Both companies have already signed an acquisition agreement, with McGrath RentCorp being valued at 3.8 billion US dollars (USD – equivalent to approximately 3.5 billion euros).

Before we delve into the details of the acquisition agreement, let me briefly introduce the two companies, which are only known in insider circles in Germany.

The companies involved in a brief profile WillScot Mobile Mini Holdings Corp. was founded in 2017 and is headquartered in Phoenix, Arizona. The company is the market leader in the North American market for modular space and mobile storage solutions, which has a volume of more than 10 billion USD.

WillScot’s product portfolio includes modular office complexes, classrooms, mobile toilets, and mobile storage containers. In addition, the company offers a selection of furniture, equipment, and other services to ensure that its container solutions are turnkey for customers.

WillScot Mobile Mini’s customers include companies in trade and industry, construction, retail and wholesale, education, energy and natural resources, government institutions, healthcare, and other end markets. The company mainly offers its solutions under the WillScot and Mobile Mini brands in the United States, Canada, and Mexico.

WillScot Mobile Mini’s approximately 4,500 employees generated sales of 2.14 billion USD in the fiscal year 2022 (more recent figures are unfortunately not yet available). Operating profit (EBIT) was 511.5 million USD.

McGrath RentCorp, founded in 1979, is based in Livermoore, California (about 70 km east of San Francisco). The company rents and sells mobile buildings and storage containers, electronic testing equipment, as well as tanks and containers for liquids and solids.

McGrath RentCorp employs around 1,200 people who generated sales of 733.8 million USD in the fiscal year 2022. EBIT was 165.2 million USD.

The takeover offer in detail According to the acquisition agreement, WillScot Mobile Mini offers McGrath RentCorp shareholders either 123.00 USD in cash or 2.8211 shares of WillScot Mobile Mini for each of their shares.

This offer includes a takeover premium of 10.1% on the closing price of McGrath’s stock on January 26, 2024, the last trading day before the announcement of the takeover offer.

The offer values McGrath at an enterprise value of 3.8 billion USD, including net debt of approximately 800 million USD. After the transaction is completed, McGrath shareholders will hold approximately 12.6% of the combined company’s shares.

Market reaction The McGrath RentCorp share price rose 10.7% yesterday (January 29, 2024) on the Nasdaq and closed at 123.75 USD. The gain in the share price was therefore marginally higher than the 10.1% premium offered by WillScot Mobile Mini.

The price of WillScot Mobile Mini shares also rose during the day, increasing by just over 1% to 45.59 USD on the Nasdaq. Investors apparently welcome the merger of the two complementary companies.

What’s next The transaction is subject to the approval of McGrath’s shareholders, regulatory approvals, and other customary closing conditions.

The companies involved expect the transaction to be completed in the second quarter of 2024.