425: WillScot Mobile Mini Addresses Shareholder Lawsuits with Supplemental Disclosures in McGrath RentCorp Merger

WillScot Mobile Mini Holdings Corp. provides supplemental disclosures to its proxy statement/prospectus related to the proposed merger with McGrath RentCorp in response to shareholder actions challenging the adequacy of disclosures.

Summary

• WillScot Mobile Mini Holdings Corp. is addressing shareholder actions related to its proposed merger with McGrath RentCorp.
• Nine demand letters and three complaints were received from purported McGrath shareholders challenging the adequacy of disclosures in the proxy statement/prospectus.
• While McGrath believes the allegations are without merit, WillScot Mobile Mini and McGrath have decided to voluntarily supplement the proxy statement/prospectus to avoid potential litigation and provide additional information to shareholders.
• The supplemental disclosures include details about confidentiality agreements with standstill provisions, financial analyses by Goldman Sachs, and selected transactions in the mobile modular industry.
• The company reaffirms that forward-looking statements are subject to risks and uncertainties and cautions against undue reliance on them.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is facing shareholder actions, it is proactively addressing them. The supplemental disclosures provide more transparency, but also highlight potential vulnerabilities. The merger is still expected to proceed.

Positives

• The company is proactively addressing shareholder concerns by providing supplemental disclosures.
• The supplemental disclosures provide additional transparency regarding the financial analyses and background of the transaction.
• The company believes the original disclosures comply fully with applicable law.

Negatives

• The shareholder actions, while believed to be without merit, create a burden and expense for the company.
• The need for supplemental disclosures may indicate potential weaknesses or omissions in the original proxy statement/prospectus.

Risks

• The occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement.
• The risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated.
• Risks related to potential litigation brought in connection with the Proposed Transaction.
• Negative perceptions of the Company or McGrath and their respective business, operations, financial condition and the industry in which they operate as a result of the Proposed Transaction.
• Effects of the announcement, pendency or completion of the Proposed Transaction on the ability of the Company and McGrath to retain customers and retain and hire key personnel and maintain relationships with suppliers and partners, and on the Company's and McGrath's respective operating results and businesses generally.
• Risks related to the potential impact of general economic, political and market factors on the parties to the Proposed Transaction or the Proposed Transaction.

Future Outlook

The document contains forward-looking statements regarding the timing and completion of the merger, anticipated financial impacts, combined company financial projections, and expected synergies, all of which are subject to risks and uncertainties.

Management Comments

• McGrath believes that the allegations in the Shareholder Actions are without merit.
• McGrath denies that it has violated any laws or breached any duties to its shareholders, denies all allegations in the Shareholder Actions, and believes no supplemental disclosure to the Proxy Statement/Prospectus was or is required under any applicable law, rule or regulation.
• The Company and McGrath believe that the disclosures set forth in the Proxy Statement/Prospectus comply fully with applicable law and nothing in the below supplemental disclosure will be deemed an admission of the legal necessity or materiality under applicable law of any of the disclosures set forth herein.

Industry Context

The document references selected transactions in the mobile modular industry, providing context for the valuation multiples used in the financial analysis. This suggests that the merger is being evaluated in comparison to similar deals in the industry.

Comparison to Industry Standards

• The document references comparable transactions in the mobile modular industry, including McGrath RentCorp's acquisition of Vesta Housing Solutions Holdings, Inc. (10.0x LTM EV/EBITDA), United Rentals' acquisition of General Finance Corporation (10.6x LTM EV/EBITDA), and WillScot Corporation's acquisition of Mobile Mini, Inc. (11.4x LTM EV/EBITDA).
• These transactions provide a benchmark for evaluating the valuation of McGrath RentCorp in the proposed merger with WillScot Mobile Mini.
• Goldman Sachs considered these transactions when determining a reference range of LTM EV/EBITDA multiples of 8.9x to 11.4x for McGrath.

Legal Proceedings

• Nine demand letters and three complaints have been received by McGrath sent on behalf of purported McGrath shareholders challenging the adequacy of certain disclosures made in the Proxy Statement/Prospectus (collectively, the Shareholder Actions).

Stakeholder Impact

• Shareholders of McGrath are impacted by the proposed merger and the related disclosures.
• The supplemental disclosures aim to provide additional information to shareholders to inform their voting decisions.

Next Steps

• McGrath shareholders will vote on the proposed merger.
• The companies will seek necessary regulatory approvals.
• The companies will continue to defend against the shareholder actions.

Key Dates