WillScot Mobile Mini Holdings Corp. WSC inked a deal with a private equity firm Kinderhook Industries to sell its Tank and Pump segment for an enterprise value of approximately $323 million, subject to customary post-closing adjustments. WSC’s shares moved down 1.09% on Aug 22.
The transaction is expected to close in the third quarter of 2022, subject to customary closing conditions and regulatory approval. Notably, the company expects to redeploy the proceeds from the transaction to support its core Modular and Storage operating segments and other capital allocation priorities. It plans to channel these proceeds via organic reinvestment, continued tuck-in acquisitions, repurchases, and de-leveraging within the targeted range.
Impressively, WSC anticipates the minimal impact of the transaction on its third-quarter operating results.
Brad Soultz, chief executive officer of WSC, stated, “Today’s announcement is aligned with our long-term strategy of optimizing our core Modular and Storage segments and staying laser-focused on the growth levers that we articulated at our November 2021 Investor Day.”
The Tank and Pump segment contributed 5.7% to total revenues and 5.6% to adjusted EBITDA in the last six months. This business offers a broad range of liquid and solid specialty containment equipment and services complemented by an assortment of pumps, filtration units, and waste hauling services. The liquid and solid containment industry is also highly fragmented, consisting principally of local providers with a handful of regional and national providers. Its competitors include United Rentals, Rain For Rent, Adler Tanks, Sprint/Republic Services, and numerous other smaller competitors.
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Shares of this Zacks Rank #3 (Hold) company have outperformed the Zacks Furniture industry in the year-to-date period. The company benefits from continuous product innovation, solid segmental results and transformation of the legacy WillScot business into Mobile Mini's SAP platform.
Yet, inflationary impacts and supply constrained are likely to put pressure on margins going forward.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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