McGrath Confirms Agreement to Terminate Pending Merger with WillScot

Rhea-AI Summary

McGrath RentCorp (Nasdaq: MGRC) has confirmed the termination of its pending merger with WillScot Holdings (Nasdaq: WSC). As per the agreement, McGrath will receive a $180 million termination fee from WillScot. The company's Board has increased the share repurchase authorization to 2 million shares. McGrath plans to provide updates on its financial outlook, business strategy, and capital allocation during its third-quarter earnings conference call on October 24, 2024.

CEO Joseph Hanna emphasized the company's commitment to growth through customer-first approach and executing their standalone strategy. McGrath will continue to focus on modular and portable storage growth opportunities, including expanded service offerings like Mobile Modular Plus, Site Related Services, and new modular equipment sales. The company aims to increase its customer base and geographic coverage while maintaining its 33-year track record of consecutive dividend increases.

Positive

• Receiving $180 million termination fee from WillScot
• Increased share repurchase authorization to 2 million shares
• Continued focus on modular and portable storage growth opportunities
• Expansion of service offerings including Mobile Modular Plus and Site Related Services
• 33-year track record of consecutive dividend increases

Negative

• Termination of previously announced merger with WillScot
• Potential loss of synergies and market expansion opportunities from the merger

Insights

Financial Analyst

The termination of McGrath's merger with WillScot marks a significant shift in the company's trajectory. The $180 million termination fee provides a substantial cash infusion, bolstering McGrath's financial position. This windfall, coupled with the increased share repurchase authorization of 2 million shares, signals a strong commitment to shareholder value.

However, the market may react negatively to the lost synergies and growth opportunities the merger promised. McGrath now faces the challenge of proving its standalone value proposition. The company's focus on expanding service offerings like Mobile Modular Plus and Site Related Services could drive organic growth, but execution will be critical. Investors should closely monitor the upcoming Q3 earnings call for detailed financial projections and capital allocation strategies to assess McGrath's ability to deliver value independently.

Market Research Analyst

The termination of the WillScot merger reshapes the competitive landscape in the modular and portable storage solutions industry. McGrath's decision to pursue a standalone strategy suggests confidence in its market position and growth prospects. The company's emphasis on customer-first approach and expanded service offerings could be a differentiator in a dynamic market.

However, the loss of potential scale and synergies from the merger may impact McGrath's competitiveness against larger players. The company's ability to expand its customer base and geographic coverage will be important for future success. Investors should watch for McGrath's market share trends and customer acquisition rates in upcoming quarters to gauge the effectiveness of its standalone strategy in capturing growth opportunities in this evolving industry.

Corporate Strategy Expert

McGrath's pivot to a standalone strategy presents both opportunities and challenges. The $180 million termination fee provides financial flexibility for strategic investments or returning value to shareholders. The increased share repurchase authorization suggests confidence in the company's intrinsic value and could support the stock price in the near term.

However, the company must now prove it can deliver growth and value creation independently. The focus on expanding service offerings and geographic coverage is promising, but execution risks remain. Investors should look for concrete plans and metrics during the Q3 earnings call to assess the viability of McGrath's standalone strategy. Key factors to monitor include the pace of new service rollouts, customer adoption rates and the company's ability to maintain its 33-year track record of dividend increases while funding growth initiatives.

McGrath to receive $180 million termination fee from WillScot

Board increases share repurchase authorization to 2 million shares

McGrath to provide updates on financial outlook, business strategy and capital allocation during its third-quarter earnings conference call on October 24, 2024

LIVERMORE, Calif.--(BUSINESS WIRE)-- McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today confirmed that WillScot Holdings Corporation (“WillScot”) (Nasdaq: WSC) and the Company mutually agreed to terminate their previously announced merger agreement. In accordance with the terms of the merger agreement, McGrath is receiving a termination fee of $180 million.

Joseph Hanna, President and Chief Executive Officer of McGrath, said: “Modular and portable storage solutions is a dynamic industry and, as we move forward, we will continue to grow and succeed through our unrelenting commitment to putting the customer first. The proposed transaction was a recognition of the enormous value created by our talented employees. Now, our team is energized and ready to execute our standalone strategy, and I am proud of the focus and tenacity the McGrath team demonstrated throughout this process. I look forward to actively engaging with our customers, partners and the financial community as we showcase the strategy that will lead McGrath’s future success. Moreover, we have always been focused on generating shareholder value as demonstrated by 33 consecutive years of dividend return increases and remain dedicated to this important objective going forward.”

McGrath’s strategic focus on our modular and portable storage growth opportunities will continue. We believe in our multi-year opportunity to bring additional value to our customers through expanded service offerings, including Mobile Modular Plus, Site Related Services and new modular equipment sales. In addition, we are committed to continuing to increase our customer base and geographic coverage. The McGrath team has demonstrated a track record of solid execution, which will be a strength as we pursue these opportunities.

Moving forward, we remain committed to building long-term shareholder value through sound strategic focus, disciplined capital allocation and consistent execution. In addition, the Company’s Board has authorized an increase in the common stock repurchase plan to 2 million shares. The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements, the Company’s insider trading policy and other factors, including management’s discretion.

We look forward to providing an update on our business and the Company’s near- and medium-term financial prospects as part of our third quarter earnings release which is currently planned on October 24, 2024.

ABOUT MCGRATH:

McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.

McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward-looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “predict,” “project,” or “will,” or the negative of these terms or other comparable terminology. In particular, statements about the outlook on future opportunities, strategic focus, implementation of the repurchase plan and the overall growth across the business are forward-looking.

These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: health of the education and commercial markets in our modular building division; unforeseen liabilities and integration challenges associated with the Vesta, Brekke Storage, Dixie Storage and Inland Storage acquisitions; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; and our ability to effectively manage our rental assets, as well as the other factors disclosed under “Risk Factors” in the Company’s Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240917988350/en/

Investor inquiries

Keith E. Pratt, EVP & Chief Financial Officer

Keith.Pratt@mgrc.com

Media inquiries

MediaRelations@MGRC.com

Source: McGrath RentCorp

FAQ

Why did McGrath RentCorp (MGRC) terminate its merger with WillScot?

The press release doesn't specify the exact reason for the termination. It states that McGrath RentCorp and WillScot mutually agreed to terminate their previously announced merger agreement.

How much is the termination fee McGrath RentCorp (MGRC) will receive from WillScot?

McGrath RentCorp will receive a termination fee of $180 million from WillScot, as per the terms of the merger agreement.

What is McGrath RentCorp's (MGRC) new share repurchase authorization?

McGrath RentCorp's Board has authorized an increase in the common stock repurchase plan to 2 million shares.

When will McGrath RentCorp (MGRC) provide updates on its financial outlook and business strategy?

McGrath RentCorp plans to provide updates on its financial outlook, business strategy, and capital allocation during its third-quarter earnings conference call on October 24, 2024.