WillScot Corporation, a specialty rental services provider of innovative modular space and portable storage solutions across North America, announced that it has entered into a definitive agreement to acquire Modular Space Holdings, Inc. (MS Holdings), the parent holding company of Modular Space Corporation (d/b/a ModSpace), for an enterprise value of approximately $1.1 billion.
Williams Scotsman will indirectly acquire MS Holdings for a purchase price comprising $1,063,750,000 of cash consideration, 6,458,500 shares of WSC Class A common stock and warrants to purchase 10,000,000 shares of WSC Class A common stock at an exercise price of $15.50 per share, subject to customary adjustments. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2018.
ModSpace, a privately-owned provider of office trailers, portable storage units and modular buildings, had approximately $1.1 billion of total assets as of March 31, 2018. ModSpace generated $453 million of total revenue, $18 million of net income and $106 million of Adjusted EBITDA for the twelve months ended March 31, 2018.2
Once combined, Williams Scotsman will have over 160,000 modular space and portable storage units serving a diverse customer base from approximately 120 locations across the United States, Canada and Mexico. Williams Scotsman expects to capture $60 million in annual cost synergies after integration, with approximately 80% of the forecast synergies expected to be realized on a full run-rate basis by the end of 2019. Williams Scotsman also expects to benefit from the net operating tax loss carryforwards to be acquired in the transaction, and for the transaction to be accretive to earnings in 2019.
Until the transaction closes, both companies will operate independently and execute on their respective strategic priorities.
According to a regulatory filing, the company executed a debt commitment letter from Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Barclays Bank PLC and Morgan Stanley Senior Funding, Inc. to help finance the purchase.
Williams Scotsman has secured committed financing to fund the transaction, which includes (i) an amendment and expansion of its existing revolving ABL credit facility to $1.35 billion with an accordion feature allowing up to $1.8 billion of total capacity, (ii) a $280 million secured bridge credit facility, and (iii) a $320 million unsecured bridge credit facility. Williams Scotsman expects the permanent financing plan to include a combination of long-term debt and equity or equity-linked securities. The timing of the permanent financing is subject to a number of factors, including but not limited to market conditions.
Brad Soultz, President and Chief Executive Officer of Williams Scotsman, commented, “ModSpace is highly complementary to our business which, when combined with Williams Scotsman, provides our shareholders with a transformational value creation opportunity. Through the combination of the best talent, practices and assets of the two companies, we expect to create an even stronger and more agile partner for our customers and vendors. We are excited about the potential to further diversify our customer end-markets, create a more balanced asset portfolio and extend our geographic footprint.”
ModSpace’s Chief Executive Officer, Charles Paquin, commented, “We are excited for the opportunities the merger will create for our customers and employees. Bringing these two premier organizations together will result in a world class business capable of delivering an unparalleled customer experience.”
Soultz continued, “We believe this transaction is a tremendous opportunity for our collective stakeholders, and I look forward to working with the ModSpace team to help the combined entity achieve even greater success. We will continue to execute on our strategic priorities, which remain focused on achieving measurable shareholder value creation through our organic growth initiatives and the seamless integration of ModSpace as we have done with the recent acquisitions of Acton and Tyson.”
Williams Scotsman expects to expand its “Ready to Work” value proposition across the ModSpace fleet and customer base, a strategy that has driven double-digit organic Adjusted EBITDA growth in Williams Scotsman’s U.S. Modular segment in recent years and proven successful in Williams Scotsman’s acquisitions of Acton Mobile (December 2017) and Tyson Onsite (January 2018).
Rothschild Inc. served as financing advisor, and Barclays Capital Inc., BofA Merrill Lynch, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and Oppenheimer & Co. Inc. served as financial advisors to Williams Scotsman.
Moelis & Company LLC served as the exclusive financial advisor to ModSpace.