WillScot And McGrath Scrap Merger Amid Regulatory Hurdles; Pivot To Stock Buybacks

McGrath RentCorp MGRC shares are trading lower on Wednesday after the company announced the termination of its merger with WillScot Holdings Corporation WSC.

In January, WillScot Mobile Mini inked a deal to acquire McGrath RentCorp for $3.8 billion. That time, McGrath's shareholders were offered for each of their shares either $123.00 in cash or 2.8211 shares of WillScot Mobile Mini common shares.

Today, WillScot and McGrath mutually agreed to terminate the transaction after jointly determining that there was no commercially viable way to meet the necessary regulatory requirements.

WillScot said despite months of thorough engagement with the U.S. Federal Trade Commission (FTC), it became clear in recent weeks that achieving regulatory approval would be overly burdensome and would hinder the execution of other value-creating initiatives.

As per the agreement, McGrath will receive a termination fee of $180 million.

Brad Soultz, Chief Executive Officer of WillScot stated, “While we are disappointed with this process, we are confident in our strategy and there are numerous opportunities to continue reinvesting in our business to deliver sustainable growth and returns over time.”

“Through our investments in product innovation and adjacent offerings, we are introducing new alternatives for customers in the marketplace. These commercial and operational initiatives represent over $1 billion of prospective Adjusted EBITDA growth potential. When combined with the natural resilience and predictability of our lease portfolio, this gives us multi-year visibility and conviction in our long-term outlook.“

McGrath’s Board has approved an increase in the common stock repurchase plan to 2 million shares.

Meanwhile, WillScot’s Board of Directors announced the expansion of its existing share repurchase program to $1 billion.

As of June-end, WillScot’s cash and cash equivalents stood at $5.92 billion.

Price Action: MGRC shares are down 2.53% at $99.60 and WSC is down 3.7% at $38.67 at the last check Wednesday.

Photo via Shutterstock

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