Why B2B Rental Company McGrath RentCorp Shares Are Surging Premarket Monday
Portfolio Pulse from Lekha Gupta
McGrath RentCorp (NASDAQ:MGRC) shares surged premarket after WillScot Mobile Mini Holdings Corp (NASDAQ:WSC) agreed to acquire the company for $3.8 billion, including $800 million of net debt. The deal offers a 10.1% premium over McGrath's closing price on January 26, 2024, with shareholders receiving either $123.00 in cash or 2.8211 WillScot shares per McGrath share. The acquisition, expected to close in Q2 2024, will give McGrath shareholders a 12.6% stake in the combined entity and is anticipated to strengthen WillScot's position in North American turnkey space solutions. WillScot's CEO anticipates the merger to accelerate growth, with a pro forma revenue of $3.2 billion and adjusted EBITDA of $1.4 billion, aiming for a $700 million free cash flow run-rate post-merger. MGRC shares are up 8.55% at $121.30, while WSC stock is down 3.68% at $43.46 premarket.
January 29, 2024 | 1:49 pm
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NEGATIVE IMPACT
WillScot Mobile Mini's stock is down premarket following the announcement of its agreement to acquire McGrath RentCorp for $3.8 billion, which includes taking on $800 million of net debt.
Acquiring companies often see their stock price decline in the short term due to the costs associated with the acquisition and the assumption of debt. The premarket dip in WSC's stock reflects these concerns.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
McGrath RentCorp's shares surged after the announcement of its acquisition by WillScot Mobile Mini for $3.8 billion, a deal that offers a 10.1% premium to its recent closing price and is expected to close in Q2 2024.
The acquisition news typically leads to a surge in the stock price of the company being acquired due to the premium offered. The 10.1% premium and the significant cash consideration are likely to be viewed positively by investors.
CONFIDENCE 90
IMPORTANCE 95
RELEVANCE 100