By Lisa Kerner
Charlotte, N.C., Feb. 22 - Mobile Storage Group, Inc. agreed to merge into Mobile Mini, Inc. in a transaction valued at $701.5 million, including the assumption of $535 million of Mobile Storage debt.
Under the portable storage companies' definitive merger agreement, Mobile Mini will acquire all outstanding shares of Mobile Storage for $12.5 million in cash and shares of newly issued Mobile Mini convertible preferred stock with a liquidation preference of $154 million.
The convertible preferred stock will be convertible into about 8.55 million Mobile Mini common shares or a conversion price of $18.00 per share.
Mobile Mini expects the merger to boost its presence in the U.K. portable storage market.
The transaction is slated to close as early as June, subject to shareholder approval and the receipt of a new $1 billion asset-based revolving credit facility.
Deutsche Bank AG, Bank of America and JPMorgan have committed financing for the credit facility to fund the transaction.
Private equity firm Welsh, Carson, Anderson & Stowe, majority owner of Mobile Storage, will convert substantially all of its equity ownership of Mobile Storage group into Mobile Mini preferred stock. Two Welsh Carson representatives will be elected to Mobile Mini's board of directors.
Mobile Mini chairman, president and chief executive officer Steven Bunger said the strategic transaction should be solidly accretive to the company's earnings in the first full year of the combination.
The merged company will include senior executives from both companies. Bunger will continue as chairman, president and CEO while Larry Trachtenberg will continue as chief financial officer.
Mobile Storage CEO Doug Waugaman will join Mobile Mini as chief operating officer of integration. Mobile Storage senior executives Jody Miller, Bill Armstead and Ron Halchishak will also assume senior roles with the combined company.
"As the integration of our companies is executed, we expect to achieve meaningful cost synergies by combining certain overlapping branch locations, consolidating corporate functions and headquarters and reducing certain combined operating expenses, which we estimate will ultimately generate a minimum of $25 million of savings on an annualized basis," Bunger said in a company news release.
Mobile Mini was advised by Oppenheimer & Co. Inc. and Deutsche Bank Securities Inc. Mobile Storage was advised by Lehman Brothers Inc.
Mobile Mini is based in Tempe, Ariz. Mobile Storage is located in Glendale, Calif.
| Acquirer: | Mobile Mini, Inc.
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| Target: | Mobile Storage Group, Inc.
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| Announcement date: | Feb. 22
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| Transaction total: | $701.5 million
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| Price per share: | $18.00
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| Expected closing: | June 2008
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| Stock price for acquirer: | Nasdaq: MINI: $16.26 on Feb. 21
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