Mobile Mini, Inc. (MINI) said it agreed to merge with privately-held Mobile Storage Group, Inc. in a transaction valued at approximately $701.5 million. The transaction will establish the combined company as a leading global provider of portable storage solutions in the US and the UK. Upon consummation of the merger, Mobile Mini will significantly expand its geographic footprint and will be positioned to cover most major markets for portable storage in both the US and the UK.
Mobile Storage Group is majority owned by the private equity firm Welsh, Carson, Anderson & Stowe.
Pursuant to the merger, Mobile Mini will assume about $535.0 million of Mobile Storage Group's outstanding indebtedness and will acquire all outstanding shares of Mobile Storage Group for $12.5 million in cash and shares of newly issued Mobile Mini convertible preferred stock with a liquidation preference of $154.0 million.
The merger is expected to generate cost synergies of at least $25 million on an annualized basis, which are expected to be fully realized by the end of fiscal 2009. Mobile Mini believes that the combination with Mobile Storage will add 21 new locations in the US and 14 locations in the UK.
The transaction is expected to be slightly accretive to earnings in 2008 (excluding merger-related expenses), and should generate substantial earnings per share accretion of 25% or more, over current analyst earnings estimates, in 2009, including the benefit of expected synergies.
The merged company will include senior executives from both companies. Mobile Mini's Chairman, President & Chief Executive Officer, Steven Bunger will continue in the same positions and Larry Trachtenberg will continue as Chief Financial Officer. Doug Waugaman, CEO of Mobile Storage Group, will join Mobile Mini as COO of Integration, reporting directly to Bunger.
Depending on the timing of various disclosure requirements, the stockholder meeting, and regulatory approvals, the transaction is expected to close as early as June 2008.
Mobile Mini also reported fourth quarter net income of $12.4 million, or $0.36 per diluted share, declined from last year's $14.0 million and $0.38 per diluted share. Total revenues increased 9% to $83.6 million from $76.7 million a year ago. Analysts expected earnings of $0.35 per share on revenue of $82.35 million.
For the quarter, EBITDA (earnings before interest expense, tax, depreciation and amortization) decreased to $32.4 million from $33.0 million in the 2006 fourth quarter.
The company said that though it expects its first quarter 2008 EBITDA to be slightly below last year, it is confident that it would be able to achieve its prior 2008 earnings guidance of between $1.50 and $1.60, excluding the impact of the merger with Mobile Storage Group. Analysts expect earnings of $1.53 per share for fiscal 2008.
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