WillScot mega-merger creates $3.2bn business

WillScot Mobile Mini has agreed to acquire its major competitor McGrath RentCorp for US3.8 billion. The deal will combine two of the largest portable accommodation and storage rental businesses in North America with annual revenues of $3.2 billion in 2023.

WillScot was a $2.3 billion revenue business in 2023 and ranked 7th in the IRN100 list of the largest rental businesses in the world. McGrath Rentcorp’s revenues in the 12 months to September last year were more than $770 million. It was ranked 36 in the IRN100 based on rental-related revenues for 2022.

The deal will create a business with 475,000 rental units, with modular space representing 72% of its business, storage rental 23%, and 5% comprising McGrath’s testing equipment rental operation, TRS-RenTelco.

Approximately 90% of combined revenue will be generated by rental, while McGrath’s Enviroplex division – which makes modular buildings for education – will expand WillScot’s permanent modular business.

The combination will give strength in three key sectors: construction, commercial/industrial and education. Both businesses were well represented in construction – representing around 40% of each – with WillScot particularly strong in commercial/industrial markets and McGrath in education.

WillScot said the acquisition would bring $50 million in annual cost savings, generated by lower corporate costs, optimising of storage fleet capacity and the branch networks, and by taking in-house more of its logistics and fleet maintenance activities.

The acquisition is being financed 60% through cash and 40% by issuing shares in the combined business to McGrath RentCorp shareholders, giving them a 12.6% stake in the new business. The $3.8 billion enterprise value of McGrath includes approximately $800 million of net debt and the share offer represents a premium of 10.1% on McGrath’s stock price on 26 January 26.

The deal is subject to regulatory approval and the approval of McGrath shareholders and is expected to close in the second quarter of the year.

“I’m excited to welcome the McGrath team to the WillScot Mobile Mini family,” said Brad Soultz, CEO 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 billion1, we will be on path to achieve a $700 million free cash flow run-rate twelve months after we close.”

Joseph Hanna, president and CEO of McGrath, said the deal gave McGrath customers and employees a platform for continued growth and providing McGrath shareholders with immediate cash value; “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.”

WillScot is headquartered in Phoenix, Arizona, and has a track-record of growth through acquisitions. In 2020 it acquired Mobile Mini, at that time one of the top three storage and accommodation rental businesses in North America.