Shares of Mobile Mini (MINI), a provider of portable storage containers, jumped to close the day 5.2% higher on Monday. The move came after the company announced plans to merge with rival WillScot (WSC) to create "an industry leading specialty leasing platform with a highly predictable modular space and portable storage leasing portfolio, complementary capabilities, and a strengthened customer value proposition."
The merger will be organized as a buyout of Mobile Mini by WillScot, with the latter company exchanging 2.405 shares of WillScot for every one share of Mobile Mini acquired. The companies are characterizing the deal as "approximately $6.6 billion" in size, including their respective debt loads.
Mobile Mini has a $1.7 billion market capitalization, but a $2.7 billion enterprise value once cash and debt are factored in. Will Scott has a $2 billion market capitalization and its enterprise value is $3.7 billion.
The companies anticipate that their combined "diversified and predictable lease revenue streams" of $1.7 billion annually and "robust free cash flow" of "greater than $290 million" annually will enable them to service their combined debt load.
Mobile Mini will be getting a small premium at the valuations stated, which seems appropriate, as it is currently profitable while WillScot is not.
Both companies' boards of directors have already approved the transaction. Assuming stockholders and regulators do likewise -- and no competing bids emerge to scotch the merger -- the companies hope to close this deal by the end of the third quarter of 2020.