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McGrath RentCorp (NASDAQ:MGRC) shares are trading higher after WillScot Mobile Mini Holdings Corp (NASDAQ:WSC) agreed to acquire the company for $3.8 billion.
The transaction, which includes about $800 million of net debt, represents a premium of 10.1% to McGrath’s closing share price on January 26, 2024.
As per the deal, McGrath’s shareholders will receive for each of their shares either $123.00 in cash or 2.8211 shares of WillScot Mobile Mini common shares, as determined pursuant to the election and allocation procedures in the merger agreement.
Also, around 60% of McGrath’s outstanding shares will be converted into cash considerations, and 40% of McGrath’s outstanding shares will be converted into stock considerations.
McGrath shareholders will have about 12.6% ownership stake in the combined company and will also benefit from a tax-free reorganization under IRC Section 368 for the stock portion of the merger consideration.
The deal is projected to close in the second quarter of 2024 and is subject to approval by McGrath shareholders, regulatory approvals and other customary closing conditions.
The acquisition is projected to boost WillScot Mobile Mini’s position in North American turnkey space solutions with a geographic footprint and a more diversified platform.
Brad Soultz, Chief Executive Officer of WillScot Mobile Mini, said, “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.”
As of September 2023, WillScot’s cash and cash equivalent stood at $5.8 million.
Price Action: MGRC shares are up 8.55% at $121.30, while WSC stock is down 3.68% at $43.46 premarket on the last check Monday.
