SEC Form DEFM14A filed by McGrath RentCorp

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12

McGrath RentCorp

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☒	No fee required.

 

☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

☐	Fee paid previously with preliminary materials.

 

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 

 

 

 

MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT

Dear McGrath RentCorp Shareholders:

On January 28, 2024, McGrath RentCorp (“McGrath”), WillScot Mobile Mini Holdings Corp., a Delaware corporation (“WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub I”), and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub II”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the approval of the McGrath shareholders and the satisfaction or (to the extent permitted by law) waiver of other specified closing conditions, Merger Sub I will merge with and into McGrath (the “First-Step Merger”), with McGrath surviving the First-Step Merger and, immediately thereafter, McGrath will merge with and into Merger Sub II (the “Second-Step Merger”, together with the First-Step Merger, the “Integrated Mergers”), with Merger Sub II surviving the Second-Step Merger as a wholly owned subsidiary of WillScot Mobile Mini. The Integrated Mergers, the issuance of shares of common stock, par value of $0.0001, of WillScot Mobile Mini (the “WillScot Mobile Mini Common Stock”) as partial Merger Consideration (as defined below) and the other transactions contemplated by the Merger Agreement, collectively referred to herein as the “Transactions.”

McGrath shareholders of record as of the close of business on May 31, 2024, are invited to virtually attend a special meeting of McGrath shareholders on July 11, 2024, at 2:00 p.m., PT (the “Special Meeting”), to consider and vote upon: (i) a proposal to adopt the Merger Agreement (the “Merger Proposal”), (ii) a non-binding, advisory proposal to approve compensation that will or may become payable by McGrath to its named executive officers in connection with the Transaction (the “Merger-Related Compensation Proposal”) and (iii) a proposal to approve the adjournment of the Special Meeting from time to time to a later date or dates, if necessary or appropriate, to solicit additional proxies in favor of the Merger Proposal if there are insufficient votes at the time of such adjournment to approve the Merger Proposal (the “Adjournment Proposal”).

If the Integrated Mergers are completed, McGrath shareholders will be entitled to receive, in exchange for each share of common stock, no par value, of McGrath (the “McGrath Common Stock”) they hold immediately prior to the effective time of the First-Step Merger (the “Effective Time”), either (i) $123.00 in cash (the “Per Share Cash Consideration”) or (ii) 2.8211 (the “Exchange Ratio”) shares of WillScot Mobile Mini Common Stock (the “Per Share Stock Consideration” and together with the Per Share Cash Consideration, the “Merger Consideration”), as determined pursuant to the election and allocation procedures set forth in the Merger Agreement. McGrath shareholders will have the opportunity to elect to receive either the Per Share Cash Consideration or the Per Share Stock Consideration in respect of their shares of McGrath Common Stock, provided that 60% of the shares of McGrath Common Stock will be converted into the Per Share Cash Consideration and 40% of the shares of McGrath Common Stock will be converted into the Per Share Stock Consideration.

The McGrath Board of Directors has unanimously determined that the Merger Agreement and the Transaction are fair to, and in the best interests of, McGrath and its shareholders; has unanimously approved and declared advisable the Merger Agreement and the Transaction; and unanimously recommends that McGrath shareholders vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger-Related Compensation Proposal and (iii) “FOR” the Adjournment Proposal.

McGrath is holding this virtual Special Meeting of its shareholders to consider certain matters relating to the Transaction. McGrath and WillScot Mobile Mini cannot complete the Transaction unless, among other things, McGrath shareholders adopt the Merger Agreement.

Your vote is very important. To ensure your representation at the Special Meeting, complete and return the applicable enclosed proxy card or submit your proxy by phone or the internet. Please vote promptly whether or not you expect to virtually attend the Special Meeting. Submitting a proxy now will not prevent you from being able to vote at the Special Meeting.

The proxy statement/prospectus accompanying this notice is also being delivered to McGrath shareholders as WillScot Mobile Mini’s prospectus for the offering of WillScot Mobile Mini Common Stock in connection with the Transaction.

The obligations of McGrath and WillScot Mobile Mini to complete the Transaction are subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, a copy of which is included as part of the accompanying proxy statement/prospectus. The proxy statement/prospectus provides you with detailed information about the Transaction. It also contains or references information about McGrath, WillScot Mobile Mini, and certain related matters. You are encouraged to read the proxy statement/ prospectus carefully and in its entirety. In particular, you should carefully read the section entitled “Risk Factors” beginning on page 26 of the proxy statement/prospectus for a discussion of risks you should consider in evaluating the Transaction and how they will affect you.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated June 10, 2024, and is first being mailed to shareholders of McGrath on or about June 10, 2024.

MCGRATH RENTCORP

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held July 11, 2024

To the Shareholders of McGrath RentCorp:

NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the “Special Meeting”) of McGrath RentCorp, a California corporation (“McGrath”), will be held virtually only at www.meetnow.global/MV9LD74, on July 11, 2024, at 2:00 p.m., PT. Shareholders will be able to listen, vote, and submit questions from any remote location that has internet connectivity. There will be no physical location for shareholders to attend. The Special Meeting will be held for the following purposes:

 

1.

To approve the Agreement and Plan of Merger, dated as of January 28, 2024 (the “Merger Agreement”), by and between McGrath, WillScot Mobile Mini Holdings Corp., a Delaware corporation (“WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub I”), and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini (“Merger Sub II”), a copy of which is included in this proxy statement/ prospectus as Annex A, pursuant to which Merger Sub I will merge with and into McGrath (“First- Step Merger”), with McGrath surviving the First-Step Merger, and immediately thereafter, McGrath will merge with and into Merger Sub II (“Second-Step Merger” and, together with the First-Step Merger, the “Integrated Mergers”), with Merger Sub II surviving the Second-Step Merger. Pursuant to the Merger Agreement, if the Integrated Mergers are completed, each share of common stock, no par value, of McGrath (“McGrath Common Stock”) will be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of common stock, par value of $0.0001, of WillScot Mobile Mini (the “WillScot Mobile Mini Common Stock”, such issuance of WillScot Mobile Mini Common Stock and together with the Integrated Mergers and the other transactions contemplated by the Merger Agreement, the “Transaction”). For additional information about the Merger Agreement and the Transaction, please see the sections entitled “Summary”, beginning on page 10 and “The Merger Agreement”, beginning on page 104 of this proxy statement/prospectus. We refer to this proposal as the “Merger Proposal.”

 

2.

To approve a non-binding, advisory proposal to approve compensation that will or may become payable by McGrath to its named executive officers in connection with the Transaction. We refer to this proposal as the “Merger-Related Compensation Proposal.”

 

3.

To approve the adjournment of the Special Meeting from time to time to a later date or dates, if necessary or appropriate, to solicit additional proxies in favor of the Merger Proposal if there are insufficient votes at the time of such adjournment to approve the Merger Proposal. We refer to this proposal as the “Adjournment Proposal.”

McGrath will transact no other business at the Special Meeting, except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof. Please refer to the proxy statement/prospectus of which this notice is part of for further information with respect to the business to be transacted at the Special Meeting.

The Board of Directors of McGrath has fixed the close of business on May 31, 2024 as the record date (the “Record Date”) for determining the shareholders entitled to notice of and to vote at the Special Meeting and any adjournment or postponement thereof. Only McGrath shareholders of record on the Record Date are entitled to receive notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof. McGrath is commencing its solicitation of proxies on or about June 10, 2024. McGrath intends to continue to solicit proxies until the date of the Special Meeting.

Completion of the Transaction is conditioned, among other things, upon approval of the Merger Proposal by the McGrath shareholders, which requires the affirmative vote of the holders of a majority of the issued and outstanding shares of McGrath Common Stock entitled to vote (in person virtually or by proxy) at the Special Meeting.

The McGrath Board of Directors has unanimously approved and declared advisable the Merger Agreement and the Transaction; has determined that the Merger Agreement and the Transaction, are fair to and in the best interest of the McGrath shareholders; and recommends that the McGrath shareholders vote:

 

•

“FOR” the Merger Proposal;

 

•

“FOR” the Merger-Related Compensation Proposal; and

 

•

“FOR” the Adjournment Proposal.

IMPORTANT

We are holding the Special Meeting as a virtual meeting (via live audio webcast) format only. On behalf of the Board of Directors and management of McGrath, we cordially invite you to attend the Special Meeting by virtual presence by logging into our live webcast at: www.meetnow.global/MV9LD74.

Your vote is very important, regardless of the number of shares of McGrath Common Stock that you own. A failure to vote your shares, or to provide instructions to your bank, broker or nominee as to how to vote your shares, is the equivalent of a vote against the Merger Proposal. Whether or not you expect to attend the Special Meeting in person, to ensure your representation at the Special Meeting, we urge you to submit a proxy to vote your shares as promptly as possible by (1) visiting the internet site listed on the McGrath proxy card, (2) calling the toll-free number listed on the McGrath proxy card or (3) submitting your McGrath proxy card by mail by using the provided self-addressed, stamped envelope. Submitting a proxy will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of McGrath Common Stock who is present at the Special Meeting may vote in person, thereby revoking any previous proxy. In addition, a proxy may also be revoked in writing before the Special Meeting in the manner described in the accompanying proxy statement/prospectus. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the bank, broker or other nominee.

Pursuant to Chapter 13 of the California General Corporation Law of the State of California, holders of McGrath Common Stock who do not vote in favor of the Merger Proposal and who otherwise strictly comply with the procedures set forth in Chapter 13 of the California Corporations Code will have the right to seek appraisal of the fair value of their shares of McGrath Common Stock, as determined by the applicable California superior court, in lieu of receiving the Merger Consideration if the Transaction is completed. To exercise this appraisal right, a McGrath shareholder must strictly comply with the procedures prescribed by California law, which are summarized in the section titled “The Transaction — Appraisal Rights in the Transaction” beginning on page 94 of the enclosed proxy statement/prospectus.

The enclosed proxy statement/prospectus provides a detailed description of the Merger Agreement, the Transaction and the other matters to be considered at the Special Meeting. We urge you to carefully read this proxy statement/prospectus, including any documents incorporated by reference herein, and the annexes in their entirety. If you have any questions concerning any of the proposals in this notice or the proxy statement/

prospectus, would like additional copies or need help voting your shares of McGrath Common Stock, please contact McGrath’s proxy solicitor or McGrath:

Morrow Sodali LLC

430 Park Avenue

New York, NY 10022

Stockholders Call (800) 662-5200 Toll Free

or (203) 658-9400

Email: [email protected]

OR

McGrath RentCorp

5700 Las Positas Road

Livermore, CA 94551

ATTN: Investor Relations

Email: [email protected]

 

Livermore, California

June 10, 2024

ADDITIONAL INFORMATION

The accompanying proxy statement/prospectus incorporates by reference important business and financial information about WillScot Mobile Mini and McGrath from other documents that are not included in or delivered with the accompanying proxy statement/prospectus. For a listing of the documents incorporated by reference into the accompanying proxy statement/prospectus, see the section entitled “Where You Can Find More Information.”

You can obtain any of the documents incorporated by reference into the accompanying proxy statement/ prospectus by requesting them in writing as follows, as applicable:

 

WillScot Mobile Mini Holdings Corp. 4646 E. Van Buren Street, Suite 400 Phoenix, Arizona 85008 Attention: Investor Relations [email protected]		McGrath RentCorp 5700 Las Positas Road Livermore, California 94551 Attention: Investor Relations [email protected]

You may also obtain any of the documents incorporated by reference into the accompanying proxy statement/prospectus without charge through the Securities and Exchange Commission (the “SEC”) website at www.sec.gov. In addition, you may obtain copies of documents filed by WillScot Mobile Mini with the SEC on WillScot Mobile Mini’s website at http://www.willscotmobilemini.com under the tab “Financial Information” or by contacting WillScot Mobile Mini’s Investor Relations at WillScot Mobile Mini Holdings Corp., 4646 E. Van Buren Street, Suite 400, Phoenix, Arizona 85008. You may also obtain copies of documents filed by McGrath with the SEC on McGrath’s website at http://www.mgrc.com under the tab “Investors” and then under the heading “Financial Information — SEC Filings” or by contacting McGrath’s Investor Relations at McGrath RentCorp, Investor Relations, 5700 Las Positas Road, Livermore, California 94551. Additionally, electronic copies of the proxy statement/prospectus are available at https://materials.proxyvote.com/580589.

We are not incorporating the contents of the websites of the SEC, WillScot Mobile Mini, McGrath or any other entity or any other website into the accompanying proxy statement/prospectus. We are providing the information about how you can obtain certain documents that are incorporated by reference into the accompanying proxy statement/prospectus at these websites only for your convenience.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by WillScot Mobile Mini (File No. 333-278544), constitutes a prospectus of WillScot Mobile Mini under Section 5 of the Securities Act with respect to the shares of WillScot Mobile Mini Common Stock to be issued to McGrath shareholders as partial Merger Consideration pursuant to the Merger Agreement. This document also constitutes a proxy statement of McGrath under Section 14(a) of the Exchange Act. It also constitutes a notice of meeting with respect to the Special Meeting, at which McGrath shareholders will be asked to consider and vote upon the McGrath Proposals and any such other business as may properly be brought before the McGrath special meeting or any adjournment or postponement thereof.

WillScot Mobile Mini has supplied all information contained or incorporated by reference into this proxy statement/prospectus relating to WillScot Mobile Mini and the Mergers Subs, and McGrath has supplied all such information relating to McGrath.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. WillScot Mobile Mini and McGrath have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/ prospectus. This proxy statement/prospectus is dated as of the date set forth above on the cover page of this proxy statement/prospectus, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to McGrath shareholders nor the issuance by WillScot Mobile Mini of shares of WillScot Mobile Mini Common Stock as partial Merger Consideration pursuant to the Merger Agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Unless otherwise indicated or as the context otherwise requires, all references in this proxy statement/ prospectus to:

 

•

“2025 Notes Indenture” has the meaning set forth on page 162

 

•

“2025 Secured Notes” has the meaning set forth on page 162

 

•

“2028 Notes Indenture” has the meaning set forth on page 163

 

•

“2028 Secured Notes” has the meaning set forth on page 163

 

•

“2031 Notes Indenture” has the meaning set forth on page 163

 

•

“2031 Secured Notes” has the meaning set forth on page 163

 

•

“ABL Facility” has the meaning set forth on page 159

 

•

“Adjournment Proposal” refers to the proposal that the McGrath shareholders adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Special Meeting to approve the Merger Proposal

 

•

“Adverse Regulatory Condition” means any action or actions that individually or in the aggregate would, or would reasonably be expected to have, a material adverse effect on (x) WillScot Mobile Mini and its subsidiaries, when taken as a whole, or (y) McGrath and its subsidiaries, when taken as a whole

 

•

“Alternative Proposal” has the meaning set forth on page 116

 

•

“Announcement 8-K” has the meaning set forth on page 63

 

•

“Antitrust Approval” has the meaning set forth on page 5

•

“ASC 805” has the meaning set forth on page 20

 

•

“A&O” has the meaning set forth on page 53

 

•

“Benefits Continuation Period” has the meaning set forth on page 121

 

•

“Borrowers” has the meaning set forth on page 159

 

•

“California Corporations Code” refers to the General Corporation Law of the State of California

 

•

“Canadian Borrowers” has the meaning set forth on page 159

 

•

“Canadian Borrowing Base” has the meaning set forth on page 160

 

•

“CAPM” has the meaning set forth on page 69

 

•

“Cash Conversion Number” has the meaning set forth on page 105

 

•

“Cash Election” has the meaning set forth on page 105

 

•

“Code” refers to the Internal Revenue Code of 1986, as amended

 

•

“Combined Company Adjusted EBIT” has the meaning set forth on page 82

 

•

“Combined Company Adjusted EBITDA” has the meaning set forth on page 81

 

•

“Combined Company Projections” has the meaning set forth on page 80

 

•

“Commitment Letter” has the meaning set forth on page 137

 

•

“Company Disclosure Schedules” has the meaning set forth on page 61

 

•

“Continuing Employee” has the meaning set forth on page 122

 

•

“Deemed Earned Units” has the meaning set forth on page 3

 

•

“DGCL” refers to the General Corporation Law of the State of Delaware

 

•

“Dissenting Shares” refers to any shares of Company Common Stock which are held immediately prior to the Effective Time of the Integrated Mergers by a holder who did not vote in favor of the Merger Proposal (or consent thereto in writing) and who is entitled to demand and properly demands appraisal of such shares

 

•

“DLLCA” refers to the Limited Liability Company Act, as amended, of the State of Delaware

 

•

“EBITDA” has the meaning set forth on page 69

 

•

“Effective Time” refers to the effective time of the First-Step Merger

 

•

“Employment Continuation Period” has the meaning set forth on page 122

 

•

“End Date” has the meaning set forth on page 111

 

•

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended

 

•

“Exchange Ratio” has the meaning set forth on the cover page of this proxy statement/prospectus

 

•

“Excluded Shares” refers to (i) shares of McGrath Common Stock held immediately prior to the Effective Time by McGrath as treasury stock or owned by WillScot Mobile Mini or a subsidiary of WillScot Mobile Mini or McGrath and (ii) Dissenting Shares

 

•

“EV” has the meaning set forth on page 69

 

•

“February 4, 2022 WillScot Offer” has the meaning set forth on page 44

 

•

“Financing Commitment Papers” has the meaning set forth on page 57

 

•

“First-Step Merger” refers to the merger of Merger Sub I with and into McGrath, with McGrath surviving the First-Step Merger as a wholly owned subsidiary of WillScot Mobile Mini

•

“Forecasted Financial Information” has the meaning set forth on page 75

 

•

“FMA” has the meaning set forth on page 158

 

•

“FRI” has the meaning set forth on page 158

 

•

“FTC” has the meaning set forth on page 5

 

•

“GAAP” refers to United States generally accepted accounting principles

 

•

“Goldman Sachs” has the meaning set forth on page 12

 

•

“Guarantors” has the meaning set forth on page 162

 

•

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended

 

•

“Initial WillScot Proposal” has the meaning set forth on page 39

 

•

“Integrated Mergers” refers to the First-Step Merger and the Second-Step Merger, together

 

•

“Intended Tax Treatment” has the meaning set forth on page 3

 

•

“Intervening Event” has the meaning set forth on page 119

 

•

“Intervening Event Notice Period” has the meaning set forth on page 118

 

•

“IRS” refers to the Internal Revenue Service

 

•

“January 14, 2024 WillScot Offer” has the meaning set forth on page 58

 

•

“July 7, 2023 WillScot Offer” has the meaning set forth on page 48

 

•

“July 19, 2023 WillScot Offer” has the meaning set forth on page 49

 

•

“KSOP” has the meaning set forth on page 114

 

•

“LTM” has the meaning set forth on page 69

 

•

“May 9, 2023 WillScot Offer” has the meaning set forth on page 46

 

•

“May 22, 2023 WillScot Offer” has the meaning set forth on page 47

 

•

“May 26, 2023 WillScot Offer” has the meaning set forth on page 47

 

•

“McGrath” refers to McGrath RentCorp, a California corporation

 

•

“McGrath Acquisition Agreement” has the meaning set forth on page 116

 

•

“McGrath Adjusted EBIT” has the meaning set forth on page 80

 

•

“McGrath Adjusted EBITDA” has the meaning set forth on page 80

 

•

“McGrath Adverse Recommendation Change” means the McGrath Board or any applicable committee thereof: (a) failing to make, withdrawing, or amending, modifying or materially qualifying, in a manner adverse to WillScot Mobile Mini, the McGrath Board Recommendation; (b) approving, adopting or recommending an Alternative Proposal; (d) failing to recommend against acceptance of any tender offer or exchange offer for the shares of McGrath Common Stock within ten (10) Business Days after the commencement (within the meaning of Rules 14d-2(a) under the Securities Exchange Act) of such offer; (e) after public announcement of an Alternative Proposal made by a person or group of persons other than WillScot Mobile Mini, failing to reaffirm the McGrath Board Recommendation within ten (10) Business Days after receipt of a written request to do so from WillScot Mobile Mini (which request WillScot Mobile Mini shall not make in excess of twice per Alternative Proposal and in excess of one additional request in respect of each modification to an Alternative Proposal); or (f) proposing, resolving or agreeing to take any of the foregoing actions

 

•

“McGrath Articles” refers to the Articles of Incorporation of McGrath, filed as Exhibit 19.1 to McGrath’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1988 with the SEC on

August 14, 1988, as amended by the Amendment to Articles of Incorporation of McGrath filed as Exhibit 3.1 to McGrath’s Registration Statement on Form S-1 with the SEC on March 28, 1991 (Registration No. 33-39633), and amended again by the Amendment to Articles of Incorporation of McGrath filed as Exhibit 3.1.2 to McGrath’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 with the SEC on March 31, 1998

 

•

“McGrath Board” refers to the Board of Directors of McGrath

 

•

“McGrath Bylaws” refers to the Amended and Restated Bylaws, filed as Exhibit 3.2 to McGrath’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with the SEC on February 21, 2024

 

•

“McGrath Common Stock” refers to common stock, no par value, of McGrath

 

•

“McGrath Forecasts” has the meaning set forth on page 79

 

•

“McGrath Notes” has the meaning set forth on page 93

 

•

“McGrath Proposals” refers to the Merger Proposal, the Merger-Related Compensation Proposal and the Adjournment Proposal

 

•

“McGrath PSU Award” has the meaning set forth on page 3

 

•

“McGrath RSU Award” has the meaning set forth on page 3

 

•

“McGrath SAR” has the meaning set forth on page 3

 

•

“McGrath shareholder” or “McGrath shareholders” refers to one or more holders of McGrath Common Stock, as applicable

 

•

“McGrath Shareholder Approval” refers to the affirmative vote of the holders of a majority of the issued and outstanding shares of McGrath Common Stock entitled to vote (in person virtually or by proxy) at the Special Meeting in favor of the Merger Proposal

 

•

“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of January 28, 2024, by and among WillScot Mobile Mini, Merger Sub I, Merger Sub II and McGrath, as may be amended from time to time

 

•

“Merger Consideration” refers to the Per Share Cash Consideration together with the Per Share Stock Consideration

 

•

“Merger Proposal” refers to the proposal that the McGrath shareholders approve and adopt the Merger Agreement

 

•

“Merger-Related Compensation Proposal” refers to the proposal that McGrath shareholders approve, by advisory (non-binding) vote, certain compensation arrangements that may be paid or become payable to McGrath’s named executive officers in connection with the Transaction

 

•

“Merger Sub I” refers to Brunello Merger Sub I, Inc., a California corporation and a wholly owned subsidiary of WillScot Mobile Mini

 

•

“Merger Sub II” refers to Brunello Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of WillScot Mobile Mini

 

•

“Merger Subs” refers to Merger Sub I and Merger Sub II

 

•

“Multicurrency Sublimit” has the meaning set forth on page 159

 

•

“M&F” has the meaning set forth on page 40

 

•

“Nasdaq” refers to, with respect to WillScot Mobile Mini and WillScot Mobile Mini Common Stock, the Nasdaq Capital Market and, with respect to McGrath and McGrath Common Stock, the Nasdaq Global Select Market

 

•

“Non-U.S. Holder” has the meaning set forth on page 98

•

“Note Guarantors” has the meaning set forth on page 162

 

•

“November 2, 2023 WillScot Offer” has the meaning set forth on page 51

 

•

“November 16, 2023 WillScot Offer” has the meaning set forth on page 51

 

•

“November 21, 2023 WillScot Offer” has the meaning set forth on page 52

 

•

“NTM” has the meaning set forth on page 70

 

•

“Party A Offer” has the meaning set forth on page 52

 

•

“Party A VDR” has the meaning set forth on page 53

 

•

“Per Share Cash Consideration” has the meaning set forth on the cover page of this proxy statement/ prospectus

 

•

“Per Share Stock Consideration” has the meaning set forth on the cover page of this proxy statement/ prospectus

 

•

“Premium Cap” has the meaning set forth on page 89

 

•

“Proposals” refers to the Merger Proposal, the Merger-Related Compensation Proposal and the Adjournment Proposal

 

•

“Record Date” refers to May 31, 2024

 

•

“Revised WillScot Offer” has the meaning set forth on page 40

 

•

“SEC” refers to the United States Securities and Exchange Commission

 

•

“Second-Step Merger” refers to the merger, immediately after the First-Step Merger, of McGrath with and into Merger Sub II, with Merger Sub II being the surviving corporation

 

•

“Securities Act” refers to the Securities Act of 1933, as amended

 

•

“Senior Employee” has the meaning set forth on page 114

 

•

“Service Providers” has the meaning set forth on page 114

 

•

“Sixth Amendment” has the meaning set forth on page 159

 

•

“Special Meeting” refers to the special meeting of McGrath shareholders to consider and vote upon the McGrath Proposals and related matters

 

•

“Stock Conversion Number” has the meaning set forth on page 105

 

•

“Stock Election” has the meaning set forth on page 105

 

•

“Substitute RSU Award” has the meaning set forth on page 108

 

•

“Superior Proposal” has the meaning set forth on page 117

 

•

“Superior Proposal Notice Period” has the meaning set forth on page 117

 

•

“Surviving Company” has the meaning set forth on page 104

 

•

“Synergy Projections” has the meaning set forth on page 67

 

•

“Transaction” refers to the Integrated Mergers, the issuance of WillScot Mobile Mini Common Stock as partial Merger Consideration and the other transactions contemplated by the Merger Agreement

 

•

“Transaction Committee” has the meaning set forth on page 40

 

•

“Treasury Regulations” has the meaning set forth on page 122

 

•

“Unlevered Free Cash Flow” has the meaning set forth on page 80

 

•

“U.S. Borrowers” has the meaning set forth on page 159

•

“U.S. Borrowing Base” has the meaning set forth on page 160

 

•

“U.S. Guarantors” has the meaning set forth on page 162

 

•

“U.S. Holder” has the meaning set forth on page 98

 

•

“Verbal Proposal” has the meaning set forth on page 50

 

•

“WillScot Mobile Mini” refers to WillScot Mobile Mini Holdings Corp., a Delaware corporation

 

•

“WillScot Mobile Mini Board” refers to the Board of Directors of WillScot Mobile Mini

 

•

“WillScot Mobile Mini Bylaws” refers to the Fifth Amended and Restated Bylaws of WillScot Mobile Mini (incorporated by reference to Exhibit 3.1 of WillScot Mobile Mini’s Current Report on Form 8-K filed with the SEC on November 2, 2022)

 

•

“WillScot Mobile Mini Charter” refers to Amended and Restated Certificate of Incorporation of WillScot Mobile Mini, amended as of June 3, 2022 (incorporated by reference to Exhibit 3.1 of WillScot Mobile Mini’s Quarterly Report on Form 10-Q filed with the SEC on April 27, 2023)

 

•

“WillScot Mobile Mini Common Stock” refers to the common stock, par value $0.0001 per share, of WillScot Mobile Mini

 

•

“WillScot Mobile Mini Forecasts” has the meaning set forth on page 77

 

•

“WillScot Mobile Mini LOI” has the meaning set forth on page 52

 

•

“WillScot Mobile Mini Plan” has the meaning set forth on page 122

 

•

“WillScot Mobile Mini Term Sheet” has the meaning set forth on page 53

 

•

“WillScot Mobile Mini VDR” has the meaning set forth on page 53

 

•

“WillScot Projections” has the meaning set forth on page 55

 

•

“WSI” has the meaning set forth on page 11

TABLE OF CONTENTS

 

SUMMARY			10
COMPARATIVE PER SHARE MARKET PRICE INFORMATION			21
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA			23
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			24
RISK FACTORS			26
THE PARTIES TO THE TRANSACTION			35
THE TRANSACTION			39
THE MERGER AGREEMENT			104
THE MCGRATH SPECIAL MEETING			128
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			136
WILLSCOT MOBILE MINI BENEFICIAL OWNERSHIP TABLE			155
MCGRATH BENEFICIAL OWNERSHIP TABLE			157
DESCRIPTION OF MATERIAL INDEBTEDNESS			159
COMPARISON OF THE RIGHTS OF SHAREHOLDERS			165
VALIDITY OF COMMON STOCK			177
EXPERTS			178
MCGRATH SHAREHOLDER PROPOSALS			179
HOUSEHOLDING OF PROXY MATERIALS			180
WHERE YOU CAN FIND MORE INFORMATION			180

ANNEXES

 

Annex A: Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			A-1
Annex B: Opinion of Goldman Sachs  & Co. LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			B-1
Annex C: Sections 1300 through 1313 of the California Corporations Code . . . . . . . . . . . . . . . . . .			C-1
Annex D: Articles of Incorporation of McGrath at the Effective Time . . . . . . . . . . . . . . . . . . . . . .			D-1
Annex E: Certificate of Formation of Merger Sub II at the Effective Time . . . . . . . . . . . . . . . . . . .			E-1

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETING

The following questions and answers briefly address some commonly asked questions about the Merger Agreement and the Special Meeting. They may not include all the information that is important to McGrath shareholders. McGrath shareholders should carefully read this entire proxy statement/prospectus, including the annexes and the other documents referred to or incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 180 of this proxy statement/prospectus.

Why am I receiving these materials?

You are receiving this proxy statement/prospectus to help you decide how to vote your shares of McGrath Common Stock with respect to the Merger Proposal, the Merger-Related Compensation Proposal, the Adjournment Proposal and any other matters to be considered at the Special Meeting.

The Transaction cannot be completed unless, among other things, McGrath shareholders approve the Merger Proposal at the Special Meeting.

This proxy statement/prospectus constitutes both a proxy statement of McGrath and a prospectus of WillScot Mobile Mini. It is a prospectus because WillScot Mobile Mini will issue shares of WillScot Mobile Mini Common Stock in exchange for outstanding shares of McGrath Common Stock (other than Excluded Shares) as partial Merger Consideration. Information about the Special Meeting, the Transaction, the Merger Agreement and the other business to be considered by McGrath shareholders at the Special Meeting is contained in this proxy statement/prospectus. McGrath shareholders should read this information carefully and in its entirety. The enclosed voting materials allow McGrath shareholders to vote their shares by proxy without attending the Special Meeting virtually.

What items of business will McGrath shareholders consider at the Special Meeting?

Shareholders will vote on the following items at the Special Meeting:

 

1.

To approve the Merger Proposal;

 

2.

To approve the Merger-Related Compensation Proposal; and

 

3.

To approve the Adjournment Proposal.

What will McGrath shareholders receive in the Transaction?

McGrath shareholders (other than those who properly elect to seek appraisal of their shares) will receive either (i) $123.00 in cash (the “Per Share Cash Consideration”) or (ii) 2.8211 (the “Exchange Ratio”) shares of WillScot Mobile Mini Common Stock (such per share consideration, the “Per Share Stock Consideration”) in exchange for each of their shares of McGrath Common Stock, as determined pursuant to the election and allocation procedures in the Merger Agreement. McGrath shareholders will have the opportunity to elect to receive either the Per Share Cash Consideration or the Per Share Stock Consideration in respect of their shares of McGrath Common Stock, provided that the maximum number of shares of McGrath Common Stock that will be entitled to receive (i) the Per Share Cash Consideration will be equal to the product of (A) the total number of shares of the McGrath Common Stock issued and outstanding immediately prior to the Effective Time multiplied by (B) 60% (rounded down to the nearest whole number) and (ii) the Per Share Stock Consideration will be equal to the product of (A) the total number of shares of McGrath Common Stock issued and outstanding immediately prior to the Effective Time multiplied by (B) 40% (rounded up to the nearest whole number). The form of Merger Consideration ultimately received by you will depend upon the election, allocation, and proration procedures described in this proxy statement/ prospectus and the choices of other McGrath shareholders, and may be different from what you elect.

 

1

Will the value of the Merger Consideration change between the date of this proxy statement/prospectus and the time the Transaction is completed?

The value of the Per Share Cash Consideration is fixed at $123.00 and will not change. The exchange ratio of 2.8211 shares of WillScot Mobile Mini Common Stock for each share of McGrath Common Stock is fixed, and no adjustments to the exchange ratio will be made based upon changes in the price of either WillScot Mobile Mini Common Stock or McGrath Common Stock prior to the completion of the Transaction or otherwise. As a result, any changes in the market price of the shares of WillScot Mobile Mini Common Stock will change the value of the Per Share Stock Consideration that a McGrath shareholder is entitled to receive if the Transaction is completed, and that value could be significantly higher or lower than the value of the Per Share Stock Consideration on the date of this proxy statement/prospectus, the date of the Special Meeting or the date on which McGrath shareholders actually receive the Per Share Stock Consideration.

Will McGrath shareholders be able to trade the WillScot Mobile Mini Common Stock that they receive in the Transaction?

Yes. The WillScot Mobile Mini Common Stock to be issued to McGrath shareholders will be listed on Nasdaq under the symbol “WSC”. Unless you are deemed an “affiliate” of WillScot Mobile Mini after the Transaction is completed, you may sell the shares of WillScot Mobile Mini Common Stock you receive without restriction.

As a McGrath shareholder, can I make an election as to the form of Merger Consideration I receive?

Yes. Holders of McGrath Common Stock will have the right to elect to receive the cash consideration or the stock consideration in exchange for their shares of McGrath Common Stock if the First-Step Merger is completed, subject to the allocation and proration provisions of the Merger Agreement. The maximum number of shares of McGrath Common Stock that will be entitled to receive the Per Share Cash Consideration will be equal to the product of (x) the total number of shares of McGrath Common Stock issued and outstanding immediately prior to the Effective Time multiplied by (y) sixty percent (60%) (rounded down to the nearest whole number), and (B) the maximum number of shares of McGrath Common Stock that will be entitled to receive the Per Share Stock Consideration will be equal to the product of (x) the total number of shares of McGrath Common Stock issued and outstanding immediately prior to the Effective Time multiplied by (y) forty percent (40%) (rounded up to the nearest whole number).

How do I elect the form of Merger Consideration that I prefer?

As a McGrath shareholder, you will receive a separate mailing that will allow you to make an election to receive either the Per Share Cash Consideration or Per Share Stock Consideration for each share of stock you own or to indicate that you have no preference. The election form will include detailed instructions regarding how to make your election and must be completed and returned separately no later than the deadline stated in the election materials. If you hold your shares in “street name” through a bank or broker, your bank or broker will separately provide instructions for making your election with respect to such shares. For more information, see “The Merger Agreement — Merger Consideration” on page 105, and “The Merger Agreement — Election Procedures; Exchange of Shares” beginning on page 106.

What will holders of McGrath equity awards receive in the Transaction?

The Merger Agreement specifies the treatment of McGrath’s outstanding equity awards in connection with the Transaction, which will be treated as follows at the Effective Time:

 

(i)

WillScot Mobile Mini will assume McGrath’s 2016 Stock Incentive Plan and 2007 Stock Incentive Plan;

 

2

(ii)

each stock appreciation award covering shares of McGrath Common Stock (a “McGrath SAR”) that is outstanding, vested and unexercised as of immediately prior to the Effective Time will be cancelled and converted into a right to receive a cash payment equal to the excess of the Per Share Cash Consideration over the applicable exercise price per share of such McGrath SAR;

 

(iii)

each restricted stock unit award covering shares of McGrath Common Stock (a “McGrath RSU Award”) that is outstanding and unvested as of immediately prior to the Effective Time will be assumed by WillScot Mobile Mini (each, a “Substitute RSU Award”), with each Substitute RSU Award being subject to the same terms and conditions as applied to the McGrath RSU Award immediately prior to the Effective Time, except that the number of shares of WillScot Mobile Mini Common Stock subject to each Substitute RSU Award will be equal to (A) the number of shares of McGrath Common Stock subject to the McGrath RSU Award immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio (with the resulting number rounded up to the nearest whole share);

 

(iv)

each McGrath RSU Award that is outstanding and vested as of immediately prior to the Effective Time (taking into account any acceleration or vesting as a result of the consummation of the Transaction), will be cancelled and converted into a right to receive the Merger Consideration, with 60% of the shares of McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Cash Consideration and 40% of the McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Stock Consideration;

 

(v)

each outstanding performance-based restricted stock unit award covering shares of McGrath Common Stock (a “McGrath PSU Award”) granted during the 2022 calendar year will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units deemed earned based on the McGrath Board’s good faith best estimate of projected actual performance through the end of the performance period (the “Deemed Earned Units”) and 60% of the Deemed Earned Units converted into Per Share Cash Consideration and 40% of the Deemed Earned Units converted into Per Share Stock Consideration; and

 

(vi)

each McGrath PSU Award granted during the 2023 calendar year will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time and 60% of the vesting restricted stock units converted into Per Share Cash Consideration and 40% of the vesting restricted stock units converted into Per Share Stock Consideration.

What are the material U.S. federal income tax consequences of the Integrated Mergers to each McGrath shareholder?

Based on certain representations, covenants and assumptions (described in the section entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers”), all of which must continue to be true and accurate in all material respects as of the effective time of the Integrated Mergers, it is the opinion of Morrison & Foerster LLP and Allen Overy Shearman Sterling US LLP that the Integrated Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder (the “Intended Tax Treatment”). However, the completion of the Integrated Mergers is not conditioned on the Integrated Mergers qualifying for such treatment or upon the receipt of an opinion of counsel to that effect. Assuming the Integrated Mergers qualify for the Intended Tax Treatment, the U.S. federal income tax consequences of the Integrated Mergers to a U.S. Holder (as defined in the section entitled “—Material U.S. Federal Income Tax Consequences of the Integrated Mergers”) who exchanges shares of McGrath Common Stock for the Merger Consideration will depend on the mix of Merger Consideration the U.S. Holder receives. In particular:

 

•

if a U.S. Holder receives solely WillScot Mobile Mini Common Stock (other than cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock), such shareholder generally will not recognize gain or loss for U.S. federal income tax purposes;

 

3

•

if a U.S. Holder receives solely cash, such shareholder generally will recognize gain or loss in an amount equal to the difference between the amount of cash received and such shareholder’s tax basis in the shares of McGrath Common Stock exchanged therefor; and

 

•

if a U.S. Holder receives a combination of WillScot Mobile Mini Common Stock and cash, such shareholder generally will recognize gain in an amount equal to the lesser of (1) the amount of cash received and (2) the amount by which the aggregate amount of cash and the fair market value of the WillScot Mobile Mini Common Stock received as Merger Consideration exceeds such shareholder tax basis in his/her shares of McGrath Common Stock exchanged therefor. A U.S. Holder who receives a combination of cash and stock pursuant to the Integrated Mergers will not be able to recognize any loss for U.S. federal income tax purposes as a result of the exchange.

The completion of the Integrated Mergers is not conditioned upon the receipt of an opinion of counsel to the effect that the Integrated Mergers, taken together, will qualify for the Intended Tax Treatment. In addition, neither McGrath nor WillScot Mobile Mini intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Integrated Mergers. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge. In the event that the Integrated Mergers do not qualify for the Intended Tax Treatment, the exchange of McGrath Common Stock for the Merger Consideration will be a taxable transaction for U.S. federal income tax purposes, and a U.S. Holder will recognize gain or loss with respect to the receipt of the Merger Consideration, regardless of whether all, a portion, or none of the Merger Consideration received by such U.S. Holder consists of WillScot Mobile Mini Common Stock.

Regardless of whether the Integrated Mergers qualify for the Intended Tax Treatment, a Non-U.S. Holder (as defined in the section entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers”) generally will not recognize any gain or loss for U.S. federal income tax purposes on the receipt of the Merger Consideration, except under specific circumstances discussed in the section entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers — U.S. Federal Income Tax Consequences of the Integrated Mergers to Non-U.S. Holders”.

You should read the section entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers” for a more complete description of the material U.S. federal income tax consequences of the Integrated Mergers to you and consult your own tax advisors regarding the U.S. federal income tax consequences of the Integrated Mergers to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Do McGrath shareholders have appraisal rights or the right to dissent from the Transaction?

Yes. Pursuant to Chapter 13 of the California General Corporation Law of the State of California, or California Corporations Code, holders of McGrath Common Stock who do not vote in favor of the Merger Proposal and who otherwise strictly comply with the procedures set forth in Chapter 13 of the California Corporations Code, have the right to seek appraisal of the fair value of their shares of McGrath Common Stock, as determined by the applicable California superior court, if the Transaction is completed. The “fair value” of shares of McGrath Common Stock as determined by the applicable California superior court could be more or less than, or the same as, the value of the Merger Consideration that a McGrath shareholder would otherwise be entitled to receive under the terms of the Merger Agreement.

To exercise appraisal or dissenters’ rights, which we refer to collectively as dissenters’ rights, McGrath shareholders must strictly comply with the procedures prescribed by California law. These procedures are summarized in the section titled “Appraisal Rights in the Transaction” beginning on page 94. Failure to strictly comply with these provisions will result in a loss of the right of appraisal or dissent.

 

4

What are the conditions to completion of the Transaction?

The consummation of the Transaction is subject to certain closing conditions. The conditions to the obligations for both WillScot Mobile Mini and McGrath to consummate the Transaction include: (i) the approval of the Merger Proposal by McGrath shareholders, (ii) the expiration or termination of all waiting periods applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act,” and such expiration or termination, the “Antitrust Approval”), (iii) the absence of any order by any governmental authorities or other legal restraint or prohibition preventing the consummation of the transactions contemplated by the Merger Agreement and (iv) declaration of effectiveness of the Registration Statement on Form S-4, of which this proxy statement/ prospectus forms a part, relating to the registration of shares of WillScot Mobile Mini Common Stock to be issued to McGrath shareholders pursuant to the Merger Agreement. The parties have submitted their respective filings under the HSR Act with the U.S. Department of Justice and the Federal Trade Commission (the “FTC”) as contemplated by the Merger Agreement and, on February 21, 2024, each of McGrath and WillScot Mobile Mini received a second request from the FTC in connection with the FTC’s review of the Transaction, which extends the waiting period until 30 days after both parties have substantially complied with the second request, unless the FTC early terminates the additional waiting period or the parties otherwise agree not to consummate the Transaction for a period of time after substantial compliance. McGrath and WillScot Mobile Mini are working with the FTC to complete its investigation as soon as practicable.

The conditions to the obligations of WillScot Mobile Mini to consummate the Transaction include: (i) McGrath must have performed in all material respects all of its obligations as set forth in the Merger Agreement; (ii) certain representation and warranties of McGrath as specified in the Merger Agreement must be true and correct, at and as of the date of the Merger Agreement and at and as of the date of closing; (iii) absence of a McGrath material adverse effect, (iv) the Antitrust Approval must not include the imposition of an Adverse Regulatory Condition on WillScot Mobile Mini, and (v) WillScot Mobile Mini must receive a certificate from an executive officer of McGrath confirming the satisfaction of certain conditions as set forth in the Merger Agreement.

The conditions to the obligations of McGrath to consummate the Transaction include: (i) each of WillScot Mobile Mini and the merger subsidiaries must have performed in all material respects all of its obligations required to be performed under the Merger Agreement, (ii) certain representation and warranties of WillScot Mobile Mini as specified in the Merger Agreement must be true and correct, at and as of the date of the Merger Agreement and at and as of the closing date, (iii) absence of a WillScot Mobile Mini material adverse effect and (iv) McGrath must receive a certificate from an executive officer of WillScot Mobile Mini confirming the satisfaction of certain conditions as set forth in the Merger Agreement.

See the Section entitled “The Merger Agreement — Conditions to Completion of the Integrated Mergers” on page 123 for additional information.

What does the McGrath Board of Directors recommend?

The McGrath Board of Directors (the “McGrath Board”) unanimously recommends that McGrath shareholders vote: “FOR” the Merger Proposal, “FOR” the Merger-Related Compensation Proposal” and “FOR” the Adjournment Proposal.

Why is my vote important?

The Transaction cannot be completed unless the McGrath shareholders approve the Merger Proposal. Information about the Special Meeting, the Transaction, and other matters to be considered by McGrath shareholders is contained in this proxy statement/prospectus.

 

5

What constitutes a quorum at the Special Meeting?

As of the close of business on the Record Date, there were 43 holders of record and 24,549,833 shares of McGrath Common Stock outstanding and entitled to vote at the Special Meeting. The presence at the Special Meeting of a majority of these shares of McGrath Common Stock, either in person by online presence or by proxy, will constitute a quorum for the transaction of business at the Special Meeting.

Q: What is the vote required to approve each proposal at the Special Meeting?

A: The Merger Proposal:

 

•

Standard: Approval of the Merger Proposal requires the affirmative vote of at least a majority of the outstanding shares of McGrath Common Stock entitled to vote on the Merger Proposal at the Special Meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the Special Meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the Merger Proposal, it will have the same effect as a vote “AGAINST” the Merger Proposal.

The Merger-Related Compensation Proposal:

 

•

Standard: Approval of the Merger-Related Compensation Proposal requires the affirmative vote of at least a majority of the shares of McGrath Common Stock represented and entitled to vote at the Special Meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Merger-Related Compensation Proposal. If you fail to submit a proxy or fail to vote in person at the Special Meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Merger-Related Compensation Proposal, it will have no effect on the vote with respect to the Merger-Related Compensation Proposal.

The Adjournment Proposal:

 

•

Standard: The Adjournment Proposal requires the affirmative vote of at least a majority of the shares of McGrath Common Stock represented and entitled to vote at the Special Meeting.

 

•

Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy it will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you fail to submit a proxy, or fail to vote in person at the Special Meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Adjournment Proposal, it will have no effect on the vote with respect to the Adjournment Proposal.

What do I need to do now?

After carefully reading and considering the information contained in this proxy statement/prospectus, please vote your shares as soon as possible so that your shares will be represented at the Special Meeting. Please follow the instructions set forth on the McGrath proxy card, or on the voting instruction form provided by the record holder if your shares are held in the name of your bank, broker or other nominee.

If you hold your shares in certificated form, please do not submit your stock certificates at this time. If the Transaction is completed, you will receive instructions for surrendering your stock certificates from the exchange agent.

 

6

Do any of McGrath’s directors or officers have interests in the Transaction that may differ from those of McGrath shareholders?

McGrath’s directors and officers have certain interests in the Transaction that may be different from, or in addition to, the interests of McGrath shareholders generally. The McGrath Board was aware of the interests of McGrath’s directors and officers and considered such interests, among other matters, when it approved the Merger Agreement and in making its recommendations to its shareholders. For more information regarding these interests, see the section entitled “The Transaction — Interests of McGrath’s Directors and Executive Officers in the Transaction.”

How are votes counted and who will count the votes?

Each outstanding share of McGrath Common Stock on the Record Date is entitled to one vote on each matter properly brought before the Special Meeting.

Computershare will administer an automated system to tabulate votes cast by proxy and act as the inspector of elections to tabulate votes cast via online presence at the Special Meeting.

Is my vote confidential?

Proxy instructions, ballots, and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within McGrath or to third parties, except:

 

•

as necessary to meet applicable legal requirements;

 

•

to allow for the tabulation and certification of votes; and

 

•

to facilitate a successful proxy solicitation.

What happens if I do not give specific voting instructions?

For Shares Directly Registered in the Name of the Shareholder: If you return your signed proxy but do not indicate your voting preferences, McGrath will vote on your behalf “FOR” the Merger Proposal, “FOR” the Merger-Related Compensation Proposal” and “FOR” the Adjournment Proposal.

For Shares Registered in the Name of a Brokerage Firm, Bank, Broker-Dealer or Other Similar Organization: If your shares are held in street name, your brokerage firm, bank, broker-dealer, or nominee will ask you how you want your shares to be voted. If you provide voting instructions, your shares must be voted as you direct. If you do not furnish voting instructions with respect to shares registered in the name of organizations that are not governed by Nasdaq Rule 2251, those shares will not be voted at the meeting because such organizations do not have discretionary voting power. If you do not furnish voting instructions to brokerage firms that are governed by Nasdaq Rule 2251, one of two things can happen, depending upon whether a proposal is “routine.” Under Nasdaq Rule 2251, brokerage firms, banks, broker-dealers, and other similar organizations have the discretion to cast votes on routine matters, without voting instructions from their clients. Brokerage firms, banks, broker-dealers, and other similar organizations are not permitted, however, to cast votes on “non-routine” matters, such as the Merger Proposal (as requested in Proposal No. 1), the Merger-Related Compensation Proposal (as requested in Proposal No. 2) or the Adjournment Proposal (as requested in Proposal No. 3), without such voting instructions.

May I change or revoke my vote after I have delivered my proxy or voting instruction card?

Yes. If you are a record holder, you may change or revoke your vote before your proxy is voted at the Special Meeting, as described herein. You may do this in one of the following four ways:

 

7

•

by logging onto the internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case, if you are eligible to do so;

 

•

by sending a notice of revocation to the Corporate Secretary of McGrath;

 

•

by sending a completed proxy card bearing a later date than your original proxy card; or

 

•

by attending the Special Meeting and voting via virtual presence.

If you choose any of the first three methods, you must take the described action no later than the beginning of the Special Meeting.

If your shares are held in an account at a bank, broker or other nominee and you have delivered your voting instruction card or otherwise given instruction on how to vote your shares to your bank, broker or other nominee or your applicable plan administrator, you should contact your bank, broker or other nominee or your applicable plan administrator to change your vote.

Your online attendance at the Special Meeting in and of itself will not automatically revoke a proxy that was submitted earlier by mail or other means.

May I vote my shares via online presence at the virtual Special Meeting?

For Shares Directly Registered in the Name of the Shareholder: Yes. However, we encourage you to vote by proxy card even if you plan to attend the Special Meeting via online presence. To be admitted to the virtual Special Meeting, and to vote via online presence at the Special Meeting, you will need the 15-digit control number included on your proxy card, or the instructions that accompanied your proxy materials.

For Shares Registered in the Name of a Brokerage Firm or Bank: Yes, but in order to do so you will need to contact such bank, broker, or other nominee to request a legal proxy and register for the Special Meeting in advance through our transfer agent, Computershare. Once proof of your proxy power (legal proxy) has been obtained, send the proof reflecting your holdings along with your name and email address to [email protected] to obtain your 15-digit control number. Registration must be received no later than 5:00 p.m. EST on July 8, 2024.

Where can I find the voting results of the Special Meeting?

The preliminary voting results will be announced at the Special Meeting. The final voting results will be tallied by the inspector of elections and reported in a current report on Form 8-K to be filed by McGrath within four business days following the date of the Special Meeting.

What happens if I sell my shares of McGrath Common Stock after the record date but before the Special Meeting?

The Record Date for the Special Meeting (the close of business on May 31, 2024) is earlier than the date of the Special Meeting and earlier than the date that the Transaction is expected to be completed. If you sell or otherwise transfer your shares of McGrath Common Stock after the Record Date but before the date of the Special Meeting, you will retain your right to vote at the Special Meeting. However, you will not have the right to receive the Merger Consideration to be received by McGrath shareholders in the Transaction. In order to receive the Merger Consideration, you must hold your shares through completion of the Transaction.

 

8

Are there any risks that I should consider in deciding whether to vote in favor of the Merger Proposal, the Merger-Related Compensation Proposal and Adjournment Proposal to be considered at the Special Meeting?

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 26. You also should read and carefully consider the risk factors of McGrath and WillScot Mobile Mini contained in the documents that are incorporated by reference into this proxy statement/prospectus.

Whom should I contact if I have any questions about the proxy materials or voting?

If you have any questions about the proxy materials, or if you need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed McGrath proxy card, you should contact Morrow Sodali LLC (“Morrow Sodali”), the proxy solicitor for McGrath toll-free at (800) 662-5200 or at (203) 658-9400 or by email at [email protected].

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

RISK FACTORS

In addition to the other information contained or incorporated by reference into this proxy statement/ prospectus, including the matters addressed in “Cautionary Note Regarding Forward-Looking Statements” beginning on page 24 of this proxy statement/prospectus, you should carefully consider the following risk factors in determining whether to vote in favor of the Proposals. You should also read and consider the risk factors associated with each of the businesses of WillScot Mobile Mini and McGrath because these risk factors may affect the operations and financial results of the combined company. These risk factors may be found under Part I, Item 1A, “Risk Factors” in the WillScot Mobile Mini 10-K and the McGrath 10-K, and future filings with the SEC, each of which is on file or will be filed with the SEC and all of which are or will be incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this document and the other documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information.”

Risks Related to the Transaction

The completion of the Transaction is subject to a number of conditions, and if these conditions are not satisfied or waived, the Transaction will not be completed.

The obligations of WillScot Mobile Mini and McGrath to complete the Transaction are subject to satisfaction or waiver of a number of conditions, including: (i) the expiration or termination of the applicable waiting period under the HSR Act without the imposition of a regulatory adverse effect, (ii) approval of the Merger Proposal by McGrath shareholders at the Special Meeting, (iii) absence of any law, injunction, judgment, order, decree or other legal restraint or prohibition preventing the consummation of the Transaction or any other transaction contemplated by the Merger Agreement and the ancillary agreements and delivery of an officer certificate by the other party certifying satisfaction, (iv) declaration of effectiveness of the Registration Statement on Form S-4, of which this proxy statement/prospectus forms a part, and (v) other customary conditions specified in the Merger Agreement. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Transaction, see the section entitled “The Merger Agreement — Conditions to Completion of the Integrated Mergers” beginning on page 123 of this proxy statement/prospectus. There can be no assurance that the conditions to completion of the Transaction will be satisfied or waived or that the Transaction will be completed.

The Transaction is subject to the expiration or termination of applicable waiting periods and the DOJ or FTC may impose conditions that could have an adverse effect on WillScot Mobile Mini, McGrath or the combined company or, if not obtained, could prevent completion of the Transaction.

Before the Transaction may be completed, any applicable waiting periods (and any extensions thereof) under the HSR Act relating to the completion of the Transaction must have expired or been terminated.

Under the Merger Agreement, WillScot Mobile Mini and McGrath have agreed to use their respective reasonable best efforts to obtain all consents required to be obtained from any governmental authority that are necessary, proper or advisable to consummate the Transaction. On February 21, 2024, each of McGrath and WillScot Mobile Mini received a second request from the FTC in connection with the FTC’s review of the Transaction, which extends the waiting period until 30 days after both parties have substantially complied with the second request, unless the FTC early terminates the additional waiting period or the parties otherwise agree not to consummate the Transaction for a period of time after substantial compliance. McGrath and WillScot Mobile Mini are working with the FTC to complete its investigation as soon as practicable. However, neither WillScot Mobile Mini nor McGrath is required to agree to or commit to any actions that individually or in the aggregate would, or would reasonably be expected to have, a material adverse effect on WillScot Mobile Mini and its subsidiaries when taken as a whole, or McGrath and its subsidiaries when taken as a whole. For a more detailed description of WillScot Mobile Mini’s and McGrath’s obligations to obtain required regulatory authorizations and approvals, see the section entitled “The Merger Agreement — Covenants and Agreements — Efforts to Obtain Regulatory Approval.”

 

26

In addition, at any time before or after the completion of the Transaction, and notwithstanding the expiration or termination of applicable waiting periods, the DOJ or FTC or any state attorney general could take such action under the antitrust laws as such party deems necessary or desirable in the public interest. Such action could include, among other things, seeking to enjoin the completion of the Transaction, to rescind the Transaction or to conditionally permit the completion of the Transaction subject to regulatory conditions or other remedies. In addition, in some circumstances, a third party could initiate a private action challenging, seeking to enjoin, or seeking to impose conditions on the Transaction. WillScot Mobile Mini and McGrath may not prevail and may incur significant costs in defending or settling any such action.

For a more detailed description of the regulatory review process, see the section entitled “The Transaction — Regulatory Approvals.”

There can be no assurance that the conditions to the completion of the Transaction set forth in the Merger Agreement relating to applicable antitrust laws will be satisfied.

Failure to complete the Transaction could negatively impact the stock price and the future business and financial results of McGrath.

If the Transaction is not completed for any reason, including as a result of McGrath shareholders failing to approve the Merger Proposal, the ongoing businesses of McGrath may be materially and adversely affected and, without realizing any of the benefits of having completed the Transaction, McGrath would be subject to a number of risks, including the following:

 

•

McGrath may experience negative reactions from the financial markets, including negative impacts on trading prices of McGrath Common Stock and from its customers, suppliers and employees;

 

•

McGrath may be required to pay WillScot Mobile Mini a termination fee of $120 million if the Merger Agreement is terminated under certain circumstances. See the sections entitled “The Merger Agreement — Termination” and “The Merger Agreement — Expenses and Termination Fees,” each beginning on page 124 and 126, respectively of this proxy statement/prospectus;

 

•

McGrath will be required to pay certain transaction expenses and other costs incurred in connection with the Transaction, whether or not the Transaction is completed;

 

•

the Merger Agreement places certain restrictions on the conduct of McGrath’s businesses prior to completion of the Transaction, and such restrictions, the waiver of which is subject to the consent of WillScot Mobile Mini, may prevent McGrath from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Transaction that McGrath would have made, taken or pursued if these restrictions were not in place (see the section entitled “The Merger Agreement — Covenants and Agreements — Conduct of Business” beginning on page 112 of this proxy statement/prospectus for a description of the restrictive covenants applicable to McGrath); and

 

•

matters relating to the Transaction (including cooperation in arranging permanent financing and integration planning) will require substantial commitments of time and resources by McGrath management and the expenditure of significant funds in the form of fees and expenses, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to McGrath as an independent company.

There can be no assurance that the risks described above will not materialize. If any of those risks materialize, they may materially and adversely affect McGrath’s businesses, financial condition, financial results, ratings, stock prices and/or bond prices.

In addition, McGrath could be subject to litigation related to any failure to complete the Transaction or related to any proceeding to specifically enforce McGrath’s obligation to perform their respective obligations

 

27

under the Merger Agreement. If the Transaction is not completed, these risks may materialize and may materially and adversely affect McGrath’s businesses, financial condition, financial results, ratings, stock prices and/or bond prices.

The Merger Agreement contains provisions that may make it more difficult for McGrath to pursue alternatives to the Transaction.

The Merger Agreement contains provisions that make it more difficult for McGrath to sell its business to a party other than WillScot Mobile Mini. These provisions include a general prohibition on McGrath soliciting any acquisition proposal, subject to specified exceptions, with WillScot Mobile Mini generally having a right to match any acquisition proposal that may be made to and explored by McGrath to the extent permitted under the Merger Agreement. Further, there are only limited exceptions to McGrath’s agreement that the McGrath Board will not withdraw or modify in a manner adverse to WillScot Mobile Mini the recommendation of the McGrath Board in favor of the Merger Proposal. However, at any time prior to the approval of the Merger Proposal, the McGrath Board is permitted to take certain of these actions if it determines in good faith that the failure to take such action would be inconsistent with its fiduciary duties under applicable law and if it complies with the other requirements related thereto as provided in the Merger Agreement. See the sections entitled “The Merger Agreement — Covenants and Agreements — No Solicitation of Alternative Proposals; Changes in McGrath Board Recommendation” beginning on page 116 of this proxy statement/prospectus.

The parties believe these provisions are reasonable and not preclusive of other offers, but these restrictions might discourage a third party that has an interest in acquiring all or a significant part of McGrath from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per-share value than the currently proposed Merger Consideration. Furthermore, the termination fee described above may result in a potential competing acquirer proposing to pay a lower per-share price to acquire McGrath, than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable by such party in certain circumstances.

The Exchange Ratio is fixed and will not be adjusted in the event of any change in either WillScot Mobile Mini’s or McGrath’s stock price.

The Exchange Ratio of 2.8211 is fixed, which means that it will not change between now and the Effective Time, regardless of whether the market price of either McGrath Common Stock or WillScot Mobile Mini Common Stock changes. Upon completion of the Transaction, each issued and outstanding share of McGrath Common Stock (other than treasury shares held by McGrath or its subsidiaries or held by WillScot Mobile Mini or its subsidiaries) will be converted into the right to receive either (i) $123.00 in cash or (ii) 2.8211 shares of WillScot Mobile Mini Common Stock (and, if applicable, cash in lieu of fractional shares), as determined pursuant to the election and allocation procedures in the Merger Agreement. Therefore, the value of the Per Share Stock Consideration will depend on the market price of the WillScot Mobile Mini Common Stock at the Effective Time.

The market price of the WillScot Mobile Mini Common Stock has fluctuated since the date of the announcement of the Merger Agreement and may continue to fluctuate from the date of this proxy statement/ prospectus to the date of the Special Meeting, the Effective Time and thereafter. The market value of the Per Share Stock Consideration to be issued at the Effective Time will not be known at the time of the Special Meeting. Therefore, current and historical market prices of WillScot Mobile Mini Common Stock may not reflect the value of the Per Share Stock Consideration that McGrath shareholders will receive in the Transaction, and the current stock price quotations for McGrath Common Stock and WillScot Mobile Mini Common Stock may not provide meaningful information to McGrath shareholders in determining whether to approve the Merger Proposal. WillScot Mobile Mini Common Stock and McGrath Common Stock are traded on Nasdaq under the symbols “WSC” and “MGRC,” respectively.

 

28

We cannot assure you that, following the Transaction, the market prices of WillScot Mobile Mini Common Stock will equal or exceed what the market price of McGrath Common Stock would have been in the absence of the Transaction. It is possible that after the Transaction, the combined equity value of WillScot Mobile Mini will be less than the combined equity value of WillScot Mobile Mini and McGrath before the Transaction. McGrath shareholders are encouraged to review carefully the other information contained or incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information.”

WillScot Mobile Mini’s and McGrath’s business relationships may be subject to disruption due to uncertainty associated with the Transaction.

WillScot Mobile Mini and McGrath have operated, and until the completion of the Transaction will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect each party’s ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the Transaction. Parties with which WillScot Mobile Mini or McGrath does business may experience uncertainty associated with the Transaction, including with respect to current or future business relationships with WillScot Mobile Mini or McGrath. McGrath’s or WillScot Mobile Mini’s business relationships may be subject to disruption as customers, vendors and others may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than WillScot Mobile Mini or McGrath. These disruptions could have a material adverse effect on the businesses, financial condition, results of operations or prospects of WillScot Mobile Mini or McGrath, including a material adverse effect on WillScot Mobile Mini’s ability to realize the anticipated benefits of the Transaction. The risk and adverse effect of such disruptions could be exacerbated by a delay in completion of the Transaction or termination of the Merger Agreement.

The unaudited pro forma condensed combined financial information and prospective financial information included in this proxy statement/prospectus is presented for illustrative purposes only and does not represent the actual financial position or results of operations of WillScot Mobile Mini following completion of the Transaction.

The unaudited pro forma condensed combined financial information and prospective financial information contained in this proxy statement/prospectus is presented for illustrative purposes only, contains a variety of adjustments, assumptions and preliminary estimates and does not represent the actual financial position or results of operations of WillScot Mobile Mini and McGrath prior to the Transaction or that of WillScot Mobile Mini following the Transaction for several reasons. Among other things, the unaudited pro forma condensed combined financial information does not reflect the projected realization of cost savings following completion of the Transaction projected integration costs, restructuring costs or any changes in applicable law. See the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information,” “The Transaction — Certain Unaudited Prospective Financial Information” and “Comparative Historical and Unaudited Pro Forma Per Share Data” beginning on pages 136, 74, and 23, respectively, of this proxy statement/prospectus. The actual financial positions and results of operations of McGrath and WillScot Mobile Mini prior to the Transaction and that of WillScot Mobile Mini following the Transaction may not be consistent with, or evident from, the unaudited pro forma condensed combined financial information or prospective financial information included in this joint proxy statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma condensed combined financial information and/or the prospective financial information included in this joint proxy statement/prospectus may not be realized and may be affected by other factors. Any significant changes in the market price of shares of WillScot Mobile Mini Common Stock may cause a significant change in the purchase price used for WillScot Mobile Mini’s accounting purposes and the pro forma condensed combined financial information contained in this joint proxy statement/prospectus.

 

29

McGrath’s executive officers and directors have interests in the Transaction that may be different from your interests as a McGrath shareholder.

When considering the recommendation of the McGrath Board that McGrath shareholders vote in favor of the Merger Proposal and the Merger-Related Compensation Proposal, McGrath shareholders should be aware that the executive officers and directors of McGrath have interests in the Transaction that may be different from, or in addition to, the interests of McGrath shareholders, generally. The McGrath Board was aware of the interests of McGrath’s directors and executive officers, and has considered such interests, among other matters, when it approved the Merger Agreement and in making its recommendations to its shareholders. Additional interests of the directors and executive officers of McGrath include the treatment in the Transaction of McGrath equity-based awards held by directors and executive officers, as applicable, certain severance payments and other benefits that McGrath executive officers are entitled to receive upon a qualifying termination of employment following the completion of the Transaction and rights to continuing indemnification and directors’ and officers’ liability insurance for current and former directors and executive officers. See “The Transaction — Interests of McGrath’s Directors and Executive Officers in the Transaction” beginning on page 83, of this proxy statement/prospectus for a more detailed description of these interests.

The opinion of the financial advisor of the McGrath Board does not reflect changes in circumstances that may have occurred or that may occur between the signing of the Merger Agreement and the Effective Time.

The McGrath Board has not obtained an updated opinion from its financial advisor as of the date of this proxy statement/prospectus, nor does it expect to receive an updated, revised or reaffirmed opinions prior to the Effective Time. Changes in the operations and prospects of WillScot Mobile Mini or McGrath, general market and economic conditions and other factors that may be beyond the control of WillScot Mobile Mini or McGrath, and on which such financial advisor’s opinion was based, may significantly alter the value of WillScot Mobile Mini, McGrath, the share price of WillScot Mobile Mini Common Stock at the Effective Time, or the anticipated benefits of the Transaction. The opinion was provided solely as of its date and does not speak as of any other date, including the date of this proxy statement/prospectus or the date on which the Transaction will be completed. Because such financial advisors will not be updating its opinion, the opinion will not address the fairness of the Merger Consideration from a financial point of view at the Effective Time. The McGrath Board’s recommendation that McGrath shareholders approve the Merger Proposal was made as of the date of the Merger Agreement and also is made as of the date of this proxy statement/prospectus. For a description of the opinion that the McGrath Board received from its financial advisors, see the section entitled “The Transaction — Opinions of McGrath’s Financial Advisor.”

Litigation relating to the Transaction may be filed against the McGrath Board and/or the WillScot Mobile Mini Board that could prevent or delay the closing and/or result in the payment of damages following the closing.

In connection with the Transaction and other transactions contemplated under the Merger Agreement, it is possible that WillScot Mobile Mini stockholders and/or McGrath shareholders may file putative class action lawsuits against the McGrath Board and/or the WillScot Mobile Mini Board. Among other remedies, these stockholders and/or shareholders could seek damages and/or to enjoin the Transaction. The outcome of any litigation is uncertain and any such potential lawsuits could prevent or delay the closing and/or result in substantial costs to WillScot Mobile Mini and/or McGrath. Any such actions may create uncertainty relating to the Transaction and may be costly and distracting to management. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the Effective Time may adversely affect WillScot Mobile Mini’s business, financial condition, results of operations and cash flows.

 

30

If the Integrated Mergers fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, U.S. holders of shares of McGrath Common Stock may recognize gain or loss for U.S. federal income tax purposes with respect to the Per Share Stock Consideration received as a result of the Integrated Mergers.

Based on certain representations, covenants and assumptions (described in the section entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers”), all of which must continue to be true and accurate in all material respects as of the effective time of the Integrated Mergers, it is the opinion of Morrison & Foerster LLP and Allen Overy Shearman Sterling US LLP that the Integrated Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder. However, the completion of the Integrated Mergers is not conditioned upon the receipt of an opinion of counsel to the effect that the Integrated Mergers will qualify for the Intended Tax Treatment. In addition, neither McGrath nor WillScot Mobile Mini intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Integrated Mergers. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge.

In the event that the Integrated Mergers fail to qualify for the Intended Tax Treatment, the Integrated Mergers will generally be taxable for U.S. federal income tax purposes, and a U.S. Holder generally would recognize gain or loss upon the exchange of McGrath Common Stock for either form of the Merger Consideration it receives (rather than only with respect to the Per Share Cash Consideration it receives) in an amount equal to the difference, if any, between (1) the sum of the fair market value of the WillScot Mobile Mini Common Stock and the total amount of cash received (including any cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock), and (2) such U.S. Holder’s tax basis in the McGrath Common Stock surrendered in exchange therefor. You should read the sections entitled “— Material U.S. Federal Income Tax Consequences of the Integrated Mergers” and consult your own tax advisors regarding the U.S. federal income tax consequences of the Integrated Mergers to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Risks Related to WillScot Mobile Mini after Completion of the Transaction

After the completion of the Transaction, WillScot Mobile Mini may fail to realize the anticipated benefits and cost savings of the Transaction, which could adversely affect the value of the shares of WillScot Mobile Mini Common Stock.

Following completion of the Transaction, the size of the WillScot Mobile Mini’s business will be significantly larger than the current size of either WillScot Mobile Mini’s or McGrath’s current respective businesses. The success of the Transaction will depend, in part, on WillScot Mobile Mini’s ability to realize the anticipated benefits, including synergies, cost savings and operational efficiencies from combining the businesses of WillScot Mobile Mini and McGrath and manage a combined business with significantly larger size and scope with the associated increased costs and complexity. WillScot Mobile Mini’s ability to realize these anticipated benefits and cost savings is subject to certain risks, including:

 

•

WillScot Mobile Mini’s ability to successfully integrate the business of McGrath and control the costs relating thereto;

 

•

whether the combined businesses will perform as expected;

 

•

the possibility that the Exchange Ratio does not accurately reflect the value WillScot Mobile Mini will derive from the acquisition; and

 

•

the assumption of known and unknown liabilities of McGrath.

If WillScot Mobile Mini is not able to successfully integrate the business of McGrath within the anticipated time frame, or at all, or the costs of such combination exceed the current expectation, the anticipated cost savings and other benefits of the Transaction may not be realized fully or may take longer to realize than expected, WillScot Mobile Mini may not perform as expected after completion of the Transaction and the value of the shares of WillScot Mobile Mini Common Stock may be adversely affected.

 

31

WillScot Mobile Mini and McGrath have operated and, until completion of the Transaction will continue to operate, independently, and there can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key WillScot Mobile Mini or McGrath employees, the disruption of either company’s or both companies’ ongoing businesses or in unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, issues that must be addressed in integrating the operations of WillScot Mobile Mini and McGrath in order to realize the anticipated benefits of the Transaction so WillScot Mobile Mini performs as expected after completion of the Transaction include, among other things:

 

•

combining the companies’ separate operational, financial, reporting and corporate functions;

 

•

integrating the companies’ products and services;

 

•

identifying and eliminating redundant and underperforming operations and assets;

 

•

harmonizing the companies’ operating practices, employee development, compensation and benefit programs, internal controls and other policies, procedures and processes;

 

•

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

•

consolidating the companies’ corporate, administrative and information technology infrastructure;

 

•

coordinating sales, distribution and marketing efforts;

 

•

managing the movement of certain businesses and positions to different locations;

 

•

maintaining existing agreements with customers and suppliers and avoiding delays in entering into new agreements with prospective customers and suppliers;

 

•

coordinating geographically dispersed organizations;

 

•

consolidating offices of WillScot Mobile Mini and McGrath that are currently in or near the same location; and

 

•

effecting potential actions that may be required in connection with obtaining regulatory approvals.

Some of these factors will be outside of WillScot Mobile Mini’s and/or McGrath’s control, and any one of them could result in delays, increased costs, decreases in the amount of expected revenues and other adverse impacts which could materially affect WillScot Mobile Mini’s financial position, results of operations and cash flows after completion of the Transaction.

In addition, at times, the attention of certain members of each company’s management and each company’s resources may be focused on completion of the Transaction and the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each company’s ongoing business and the business of WillScot Mobile Mini after completion of the Transaction.

Upon the completion of the Transaction, McGrath shareholders will have different rights under the WillScot Mobile Mini’s governing documents than they currently have under McGrath’s governing documents.

Upon the completion of the Transaction, McGrath shareholders will no longer be shareholders of McGrath, but all McGrath shareholders who receive the Per Share Stock Consideration in exchange for some or all of their shares of McGrath will become stockholders of WillScot Mobile Mini and their rights as stockholders will be governed by the terms of the DGCL, the WillScot Mobile Mini Charter and the WillScot Mobile Mini Bylaws. The terms of the WillScot Mobile Mini Charter and the WillScot Mobile Mini Bylaws will be in some respects different than the terms of the McGrath Articles and McGrath Bylaws, and the DGCL differs in some respects from the California Corporations Code, which currently govern the rights of McGrath shareholders. For example, unlike the provisions of the McGrath Charter, the WillScot Mobile Mini Charter provides that the Court of

 

32

Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions brought against WillScot Mobile Mini or its directors, officers, or other employees by its stockholders, which could limit the ability of stockholders of WillScot Mobile Mini to obtain the judicial forum of their choice for disputes with WillScot Mobile Mini or its directors, officers, or other employees.

For a more complete description of the different rights associated with shares of McGrath Common Stock and shares of WillScot Mobile Mini Common Stock, see the section entitled “Comparison of the Rights of Stockholders.”

McGrath shareholders will have a significantly lower collective ownership and voting interest in WillScot Mobile Mini following the completion of the Transaction than they currently have in McGrath and therefore collectively will exercise less influence over management than they currently are able to do as McGrath shareholders.

Based on the consideration payable to holders of McGrath Common Stock pursuant to the Merger Agreement and the number of shares of WillScot Mobile Mini Common Stock and McGrath Common Stock outstanding as of the record date, it is expected that, immediately after completion of the Transaction, such former McGrath shareholders will own approximately 12.6% of the outstanding WillScot Mobile Mini Common Stock. Consequently, the influence that former McGrath shareholders will have over the management and policies of WillScot Mobile Mini will be different than what they currently have over the management and policies of McGrath.

WillScot Mobile Mini expects to incur substantial expenses related to the completion of the Transaction and the integration of the businesses of WillScot Mobile Mini and McGrath.

WillScot Mobile Mini will incur substantial expenses in connection with the completion of the Transaction to integrate a large number of processes, policies, procedures, operations, technologies and systems of WillScot Mobile Mini and McGrath. The substantial majority of these costs will be non-recurring expenses related to the Transaction and facilities and systems consolidation costs. WillScot Mobile Mini may incur additional costs or suffer loss of business under third-party contracts that are terminated or that contain change in control or other provisions that may be triggered by the completion of the Transaction, and/or losses of, or decreases in orders by, customers, and may also incur costs to retain certain key management personnel and employees. WillScot Mobile Mini will also incur transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs and time delays. These incremental transaction-related costs may exceed the savings WillScot Mobile Mini expects to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs. Factors beyond the parties’ control could affect the total amount or timing of these expenses, many of which, by their nature, are difficult to estimate accurately.

The market price of shares of WillScot Mobile Mini Common Stock after completion of the Transaction may be affected by factors different from those that are currently affecting or historically have affected the market price of shares of McGrath Common Stock.

Upon completion of the Transaction, holders of McGrath Common Stock will become holders of shares of the WillScot Mobile Mini Common Stock. The market price of WillScot Mobile Mini Common Stock may fluctuate significantly following completion of the Transaction, and holders of McGrath Common Stock could lose the value of their investment in WillScot Mobile Mini Common Stock. The issuance of shares of WillScot Mobile Mini Common Stock in the Transaction could on its own have the effect of depressing the market price of shares of WillScot Mobile Mini Common Stock. In addition, many McGrath shareholders may decide not to hold the shares of WillScot Mobile Mini Common Stock they receive as a result of the Transaction. Other McGrath shareholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be

 

33

required to sell the shares of WillScot Mobile Mini Common Stock they receive as a result of the Transaction. Any such sales of WillScot Mobile Mini Common Stock could have the effect of depressing the market price of shares of WillScot Mobile Mini Common Stock. Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, WillScot Mobile Mini Common Stock, regardless of WillScot Mobile Mini’s actual operating performance.

The business of WillScot Mobile Mini differs from that of McGrath in important respects and, accordingly, the results of operations of the WillScot Mobile Mini after completion of the Transaction, as well as the market price of shares of WillScot Mobile Mini Common Stock, may be affected by factors different from those that are currently affecting, historically have affected or would in the future affect the results of operations of McGrath as a stand-alone public company, as well as the market price of shares of McGrath Common Stock. For further information on the respective businesses of WillScot Mobile Mini and McGrath and certain factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 180 of this proxy statement/prospectus.

The credit ratings of WillScot Mobile Mini may be impacted by the additional indebtedness it expects to incur in connection with the Transaction and any negative impact on credit ratings may impact the cost and availability of future borrowings and, accordingly, the cost of capital of WillScot Mobile Mini after completion of the Transaction.

A company’s credit ratings at any time will reflect each rating organization’s then opinion of the financial strength, operating performance and ability to meet debt obligations of that company. The additional indebtedness WillScot Mobile Mini expects to incur in connection with the Transaction may result in a negative change to credit ratings of WillScot Mobile Mini prior to the Effective Time and after the Effective Time, including a potential downgrading. Any reduction in credit ratings may limit WillScot Mobile Mini’s ability to borrow at interest rates consistent with the interest rates that have been available to WillScot Mobile Mini prior to the Transaction and the related debt financing. If credit ratings of WillScot Mobile Mini are further downgraded or put on watch for a potential downgrade, WillScot Mobile Mini may not be able to sell additional debt securities or borrow money in the amounts, at the times or interest rates or upon the more favorable terms and conditions that might be available if the current credit ratings of WillScot Mobile Mini were maintained.

Other Risk Factors

Risks related to WillScot Mobile Mini and McGrath.

WillScot Mobile Mini and McGrath are, and, following completion of the Transaction, WillScot Mobile Mini will continue to be, subject to the risks described in Part I, Item 1A in the WillScot Mobile Mini 10-K, and Part I, Item 1A in the McGrath 10-K, as updated by WillScot Mobile Mini’s and McGrath’s respective Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and 8-K/A and future filings with the SEC, in each case, incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 180 of this proxy statement/prospectus.

 

34

THE PARTIES TO THE TRANSACTION

WillScot Mobile Mini Holdings Corp.

Headquartered in Phoenix, Arizona, WillScot Mobile Mini is a leading business services provider specializing in innovative flexible work space and portable storage solutions. WillScot Mobile Mini services diverse end markets across all sectors of the economy from a network of approximately 250 branch locations and additional drop lots throughout the US, Canada, and Mexico.

With roots dating back more than 80 years, WillScot Mobile Mini leases modular space and portable storage units to customers in the construction, commercial and industrial, retail and wholesale trade, energy and natural resources, education, government and institutions, healthcare and other end markets. WillScot Mobile Mini offers its customers an extensive selection of “Ready to Work” solutions with value-added products and services, such as the rental of steps, ramps, and furniture packages, damage waivers, and other amenities to improve the overall customer experience. These turnkey solutions offer customers flexible, low-cost, and timely solutions to meet their flexible work space and storage needs on an outsourced basis.

Modular Space Solutions

WillScot Mobile Mini’s modular space units meet a broad range of customer needs. WillScot Mobile Mini’s modular units are typically made of steel and aluminum frames, as well as traditional building materials, and range from standalone portable units as small as 24 square feet to large complex units that can be coupled together or stacked to create versatile work spaces in excess of 10,000 square feet. In all cases, WillScot Mobile Mini deploys modular units to customers rapidly from its extensive branch network using its hybrid in-house and outsourced logistics and service infrastructure. WillScot Mobile Mini specializes in turnkey ‘Ready to Work’ solutions, which means its units can arrive fully equipped with air conditioning, heating, and filtration units, electrical and Ethernet ports, plumbing and utility hookups, as well as its proprietary line of furnishings and appliances, which it refers to collectively as VAPS. WillScot Mobile Mini’s units are transported by truck, either towed (if fitted with axles and hitches) or mounted on flat-bed trailers.

Panelized and Stackable Offices. WillScot Mobile Mini’s Flex^TM panelized and stackable offices are the next generation of modular space technology and offer maximum flexibility and design configurations. These units provide a modern, innovative design, smaller footprint, ground level access, and interchangeable panels, including all glass panels that allow customers to configure the space to their precise requirements. These units have the ability to expand upwards up to three stories and outwards, which provides maximum versatility.

Single-Wide Modular Space Units. Single-wide modular space units include mobile offices and sales offices. These units offer maximum ease of installation and removal and are deployed across the broadest range of applications in our fleet. These units typically have “open interiors,” which can be modified using movable partitions, and include tile floors, air conditioning, heating and filtration units, partitions and toilet facilities.

Section Modulars and Redi-Plex. Section modulars are two or more units combined into one structure. Redi-Plex complexes offer advanced versatility for large, open floor plans or custom layouts with private offices. Redi-Plex is built with clearspan construction, which eliminates interference from support columns and allows for up to sixty feet of open building width and building lengths that increase in twelve- foot increments based on the number of units coupled together. Our proprietary design meets a wide range of national and state building, electrical, mechanical, and plumbing codes, which creates versatility in fleet management. Examples of section modular units include hospital diagnostic annexes, special events headquarters, temporary data centers, and larger general commercial offices.

Classrooms. Classroom units are generally double-wide units or Flex panelized units adapted specifically for use by school systems or universities. Classroom units usually feature teaching aids, air conditioning, heating and filtration units, windows and, if requested, toilet facilities.

 

35

Ground Level Offices. WillScot Mobile Mini also offers steel ground level offices from 10 to 40 feet in length and 8 or 10 feet in width. Many of these units are converted to office use from International Organization for Standardization (“ISO”) certified shipping containers. These offices are available in various configurations, including all-office floor plans or office and storage combination units that provide a 10- or 15-foot office with the remaining area available for storage. Ground level offices provide the advantage of ground accessibility for ease of access and high security in an all-steel design. These office units are equipped with electrical wiring, air conditioning, heating and filtration units, phone jacks, carpet or tile, high security doors, and windows with security bars or shutters. Some of these offices are also equipped with sinks, hot water heaters, cabinets and toilet facilities.

Other Modular Space. WillScot Mobile Mini offers a range of other specialty products that vary across regions and provide flexibility to serve demands for local markets. Examples include large clearspan structures, workforce accommodation units, blast-resistant units, and toilet facilities to complement office and classroom units.

Portable Storage Solutions

Portable Storage Containers. WillScot Mobile Mini’s portable storage containers offer an assortment of differentiated features such as patented locking systems, premium and multiple door options, optional climate control, and numerous configuration options. Standard portable storage containers are made from weather-resistant corrugated steel and are available in lengths ranging from 5 to 48 feet, widths of either 8 feet or 10 feet, and a variety of configuration options. Doors can be placed at the front, front and back, or the sides of containers. Other options include partitions, shelving and lighting. Storage containers can be equipped with our patented Tri-Cam Locking System^®, which features a waist-level opening lever and interlocking bars to provide easy access for the owner without sacrificing security. WillScot Mobile Mini also offers ContainerGuardLock^®, an optional security device, which features a hidden six-pin tumbler system and is made from drill-resistant hardened steel. WillScot Mobile Mini believes these steel storage containers are a more convenient and cost-effective alternative to mass warehouse storage, with a high level of security to protect our customers’ goods on location at their job site, facility, retail location, or office site.

Steel containers have a long useful life with no technical obsolescence. WillScot Mobile Mini’s portable storage containers generally have estimated useful lives of 30 years from the date we build or acquire and remanufacture them, with average residual values in excess of 50%. WillScot Mobile Mini maintains its steel containers on a regular basis by removing rust, painting them with rust inhibiting paint, plug-welding holes, and occasionally replacing the wooden floor or a rusted steel panel. Repainting the outside of storage units is the most common maintenance item. A properly maintained container is essentially in the same condition as when it was initially acquired or remanufactured.

The remanufacturing process begins with the purchase of used ISO containers from leasing companies, shipping lines, and brokers. These containers are typically built to ISO standards and are 8 feet wide, up to 9.5 feet high and 20, 40 or 45 feet long. After acquisition, WillScot Mobile Mini remanufactures and modifies these certain containers. Remanufacturing typically involves cleaning, removing rust and dents, repairing floors and sidewalls, painting, and adding company logos or signs, and may include further customization by adding WillScot Mobile Mini’s proprietary easy opening door system and its patented Tri-Cam Locking System^®. Modification can also involve splitting containers into differing lengths.

VAPS

WillScot Mobile Mini offers a thoughtfully curated portfolio of VAPS that make modular space and portable storage units more productive, comfortable, secure, and “Ready to Work” for its customers. WillScot Mobile Mini leases furniture, steps, ramps, basic appliances, internet connectivity devices, integral tool racking, heavy duty capacity shelving, workstations, electrical and lighting products and other items to its customers for

 

36

use in connection with its products. WillScot Mobile Mini also offers its lease customers a damage waiver program that protects them in case the leased unit is damaged. For customers who do not select the damage waiver program, WillScot Mobile Mini bills them for the cost of repairs above and beyond normal wear and tear. Importantly, management believes that WillScot Mobile Mini’s scale, branch network, supply chain, and sales performance management tools give us a significant advantage in delivering “Ready to Work” solutions and growing VAPS revenue relative to its competitors.

Delivery, Installation and Removal

WillScot Mobile Mini operates a hybrid in-house and outsourced logistics and service infrastructure that provides delivery, site work, installation, disassembly, unhooking and removal, and other services to its customers for an additional fee as part of its leasing and sales operations. Revenue from delivery, site work, and installation results from the transportation of units to a customer’s location, as well as site work required prior to installation, and installation of the units which have been leased or sold. Typically, modular units are placed on temporary foundations constructed by WillScot Mobile Mini’s in-house service technicians or subcontractors. These in-house service technicians or subcontractors also generally install any ancillary products and VAPS. WillScot Mobile Mini also derives revenue from disassembling, unhooking, and removing units once a lease expires. WillScot Mobile Mini believes that its logistics and service capabilities are unrivaled in the industry, differentiate it from competitors, and enhance its value proposition to its customers.

WillScot Mobile Mini’s principal executive offices are located at 4646 E. Van Buren Street, Suite 400, Phoenix, AZ 85008, and its telephone number is (480) 894-6311. WillScot Mobile Mini’s website address is www.willscotmobilemini.com. Information contained on WillScot Mobile Mini’s website does not constitute part of this proxy statement/prospectus. WillScot Mobile Mini’s Common Stock is publicly traded on Nasdaq, under the ticker symbol “WSC.” Additional information about WillScot Mobile Mini is included in documents incorporated by reference in this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information.”

McGrath RentCorp

McGrath was incorporated in California in 1979 and is headquartered in Livermore, California. McGrath is a diversified business-to-business rental company that rents and sells relocatable modular buildings, storage containers and offices, and electronic test equipment. McGrath operates through five divisions: (i) Mobile Modular, (ii) Mobile Modular Portable Storage, (iii) TRS-RenTelco, (iv) Kitchens To Go and (v) Enviroplex.

Mobile Modular provides prefabricated and customizable modular buildings for rent, lease and sale to clients in the education, construction, healthcare, government, commercial, retail, industrial and petrochemical markets, while Mobile Modular Portable Storage provides temporary portable storage solutions. TRS-RenTelco is the market leader in B2B test equipment rentals and sales. Through its Enviroplex division, McGrath provides permanent modular facilities for the California educational system. Finally, Kitchens To Go provides temporary and permanent solutions for foodservice providers as well as ancillary support, including dry/cold/frozen storage, ware-washing, dinging space, restrooms and offices.

McGrath’s stock is listed on Nasdaq under the ticker symbol “MGRC”. McGrath’s executive offices are located at 5700 Las Positas Rd., Livermore, CA 94551, and its main telephone number is (925) 606-9200. For additional information about McGrath, see “Where You Can Find More Information” beginning on page 180 or visit McGrath’s website at https://www.mgrc.com/. The information provided on McGrath’s website is not part of this proxy statement and is not incorporated by reference in this proxy statement.

Brunello Merger Sub I, Inc.

Brunello Merger Sub I, Inc., a wholly owned subsidiary of WillScot Mobile Mini, is a California corporation incorporated on January 23, 2024 for the purpose of effecting the First-Step Merger. Brunello Merger

 

37

Sub I, Inc. has not conducted any activities other than those incidental to its formation and the matters contemplated by the Merger Agreement. The principal executive offices of Brunello Merger Sub I, Inc. are located at 4646 E. Van Buren Street, Suite 400, Phoenix, AZ 85008, and its telephone number is (480) 894-6311.

Brunello Merger Sub II, LLC

Brunello Merger Sub II, LLC, a wholly owned subsidiary of WillScot Mobile Mini, is a Delaware limited liability company formed on January 24, 2024 for the purpose of effecting the Second-Step Merger. Brunello Merger Sub II, LLC has not conducted any activities other than those incidental to its formation and the matters contemplated by the Merger Agreement. The principal executive offices of Brunello Merger Sub II, LLC are located at 4646 E. Van Buren Street, Suite 400, Phoenix, AZ 85008, and its telephone number is (480) 894-6311.

 

38

THE TRANSACTION

The following is a discussion of the Transaction. The descriptions of the Merger Agreement in this section and elsewhere in this proxy statement/prospectus are qualified in their entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A, and is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the Transaction that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about WillScot Mobile Mini or McGrath. Such information can be found elsewhere in this proxy statement/ prospectus and in the public filings WillScot Mobile Mini and McGrath make with the SEC that are incorporated by reference into this proxy statement/prospectus, as described in the section entitled “Where You Can Find More Information.”

Background of the Transaction

The following is a summary of the key events leading up to the execution of the Merger Agreement. However, this summary does not purport to catalog every conversation or interaction between McGrath and WillScot Mobile Mini and their respective representatives, as well as other parties.

The McGrath Board, with assistance from senior management and advisors, regularly reviews and assesses the performance, future growth prospects, business plans and overall strategic direction of McGrath, and considers strategic alternatives that may be available to McGrath, taking into account McGrath’s performance, risks and position, as well as economic, regulatory and competitive conditions, including (i) continuing to pursue McGrath’s strategy as a standalone company, (ii) engaging in acquisitions of suitable businesses and assets; and (iii) pursing potential strategic transactions with third parties, in each case with the goal of maximizing shareholder value.

From time to time over the past several years, McGrath and WillScot Mobile Mini had discussions regarding potential collaborations.

Between March and June 2021, the respective Chief Executive Officers of McGrath and WillScot Mobile Mini, Messrs. Joseph F. Hanna and Bradley L. Soultz, discussed various potential transactions, including McGrath’s sale of certain roll-off boxes and tank units to WillScot Mobile Mini, both of which have since been divested by each company.

McGrath and WillScot Mobile Mini signed a confidentiality agreement, effective as of June 14, 2021, with regards to the sale of roll-off boxes and tank units to WillScot Mobile Mini.

On or about June 29, 2021, Mr. Soultz made a high-level presentation to Messrs. Hanna and Keith E. Pratt, McGrath’s Chief Financial Officer, at McGrath’s Livermore offices and suggested a potential acquisition of McGrath’s operations, for an enterprise value of approximately $2.7 to $2.8 billion (the “Initial WillScot Proposal”), including up to 10% of the proposed consideration in the form of WillScot Mobile Mini Common Stock, based on certain valuation assumptions about McGrath’s TRS business.

On or about June 30, 2021, Mr. Hanna discussed the Initial WillScot Proposal with the McGrath Board Chair, Mr. Bradley M. Shuster. Both agreed that the Initial WillScot Proposal undervalued McGrath, and that Mr. Hanna should respond to Mr. Soultz accordingly.

On July 7, 2021, Mr. Hanna responded to WillScot Mobile Mini in an email noting that, although McGrath appreciated the Initial WillScot Offer, it undervalued McGrath, and McGrath was confident in management’s ability to execute its strategic plan as a standalone company.

 

39

On August 12, 2021, Mr. Soultz met with Mr. Hanna and suggested that WillScot Mobile Mini was interested in acquiring McGrath at $100.00 per share with consideration of up to 10% in equity and the rest in cash.

On August 25, 2021, Mr. Hanna received a non-binding written indication of interest from WillScot Mobile Mini, dated August 12, 2021, whereby WillScot Mobile Mini sought to acquire McGrath for $100.00 per share in cash (the “Revised WillScot Offer”). The Revised WillScot Offer set forth that WillScot Mobile Mini intended to finance the proposed transaction with a combination of cash, borrowings under its existing credit facility (supplemented by an incremental facility) and the issuance of debt securities.

On September 17, 2021, the McGrath Board held a meeting, at which a representative of Morrison & Foerster, LLP (“M&F”), McGrath’s outside legal counsel, was also present. The McGrath Board discussed the Revised WillScot Offer. McGrath’s senior management discussed McGrath’s long-term strategy with preliminary financial projections of the company on a standalone basis. M&F’s representative provided the McGrath Board with a general overview of the fiduciary duties of the McGrath Board in relation to consideration of the Revised WillScot Offer. Following a discussion regarding the Revised WillScot Offer and next steps, the McGrath Board approved the establishment of a committee of the McGrath Board composed of independent members of the McGrath Board, which would work with McGrath’s management to generate more detailed long term financial projections of McGrath on a standalone basis, engage a financial advisor, as appropriate, review the Revised WillScot Offer, negotiate with WillScot Mobile Mini on potential deal terms, and review and evaluate other potential strategic opportunities involving McGrath and report to and make recommendations to the McGrath Board (the “Transaction Committee”). The Transaction Committee was initially comprised of Mr. Shuster, Mr. William J. Dawson and Mr. M. Richard Smith with Mr. Shuster as Chair. The McGrath Board did not delegate any authority to approve a transaction to the Transaction Committee and the members of the Transaction Committee did not receive additional compensation for their services on the committee.

On October 1, 2021, the Transaction Committee had a meeting, at which McGrath’s senior management and a representative of M&F were also in attendance. Mr. Hanna provided the Transaction Committee with an update on management’s efforts to enable a response to the Revised WillScot Offer, including efforts to gather financial and other data of McGrath to provide a detailed analysis of McGrath as a standalone operating company. Next, the Transaction Committee discussed the potential engagement of Goldman Sachs to serve as McGrath’s financial advisor to assist McGrath in its review of the Revised WillScot Offer and other potential strategic opportunities. The Transaction Committee discussed Goldman Sachs’ reputation, experience and knowledge of the industry and experience advising companies in mergers and acquisitions. The representative of M&F reviewed with the Transaction Committee legal issues and considerations associated with McGrath’s response to the Revised WillScot Offer and exploration of other strategic opportunities. Following discussion, the Transaction Committee authorized McGrath’s senior management, with assistance from M&F, to finalize an engagement letter with Goldman Sachs.

On October 15, 2021, the Transaction Committee held a meeting, at which members of McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, representatives of Goldman Sachs discussed the financial terms of the Revised WillScot Offer, McGrath’s standalone operations, and certain strategic opportunities available to McGrath, as well as the competitive landscape in which McGrath operates and market conditions. McGrath’s senior management then discussed the fact that McGrath’s historical financial statements presented only the original cost basis for its Livermore and Mira Loma real estate and that additional analysis is needed to gauge the potential value associated with such land, which potential value could increase McGrath’s valuation. After discussion, the Transaction Committee instructed management to conduct further analysis of the value of McGrath’s real estate portfolio. The representative of M&F reviewed various legal considerations regarding the Revised WillScot Offer in relation to the information about the value of McGrath’s real estate portfolio. Representatives of Goldman Sachs then departed the meeting. At the Transaction Committee’s request, the M&F representative provided a status report on the Goldman Sachs engagement letter and also reviewed the disclosures

 

40

communicated by Goldman Sachs regarding its prior relationship with WillScot Mobile Mini and other competitors of McGrath in the industry, as well as the impact of such prior relationships in connection with Goldman Sachs’ engagement as McGrath’s financial advisor.

On October 25, 2021, the Transaction Committee held a meeting, at which members of McGrath’s senior management and a representative of M&F were also present. At the meeting, Mr. Hanna provided an update on the real estate analysis and management’s preliminary views of the value of the Livermore and Mira Loma real estate. Mr. Hanna also discussed McGrath’s third quarter 2021 financial performance. The Transaction Committee, Mr. Hanna, and the representative of M&F then discussed next steps, legal considerations and recommendations related to McGrath’s response to the Revised WillScot Offer. After further discussion, the Transaction Committee determined that it was prudent for Mr. Shuster to have a conversation with Mr. Soultz to express McGrath’s view that the offer undervalued it. The Transaction Committee further agreed that the timing of such conversation should be after management’s completion of the real estate analysis.

On November 1, 2021, the McGrath Board held a meeting, at which a representative of M&F and representatives of Goldman Sachs were also present. Mr. Shuster discussed the proposed communication recommended by the Transaction Committee that he would have with Mr. Soultz regarding the inadequacy of the Revised WillScot Offer. Members of the Transaction Committee then noted their consideration of the potential benefits and risks of conducting some form of market check and whether it was likely that another acquiror might be interested in acquiring McGrath at a price greater than that proposed by WillScot Mobile Mini. Representatives of Goldman Sachs discussed potential companies that might be interested in acquiring McGrath at or above WillScot Mobile Mini’s current offer, and such companies’ M&A track record, resources and capabilities. Representatives of Goldman Sachs also discussed considerations related to a divestiture of the TRS business. The Transaction Committee noted the potential risks and benefits of reaching out to a broader group of potential acquirors, including the potentially significant harm to McGrath and its business should discussions about a possible sale leak publicly. After further discussion, the McGrath Board determined that (“Party A”) was the only company with a successful M&A track record and requisite resources to propose an acquisition of McGrath at a deal consideration superior to WillScot Mobile Mini. After further discussion, the Transaction Committee determined that it was prudent and in the best interests of shareholders to instruct representatives of Goldman Sachs at the appropriate time to communicate with Party A to inquire whether Party A would be interested in acquiring McGrath and at what valuation.

Later on November 1, 2021, Goldman Sachs provided an updated customary relationship disclosure letter to McGrath providing certain information regarding its relationships with WillScot Mobile Mini and McGrath executed an engagement letter with Goldman Sachs as McGrath’s financial advisor.

Thereafter on November 1, 2021, Messrs. Shuster and Soultz had a telephone call whereby Mr. Shuster noted that the McGrath Board was reviewing the Revised WillScot Offer and had engaged Goldman Sachs as financial advisor and would continue to engage M&F, its outside counsel, as legal advisor for the proposed transaction. However, Mr. Shuster further indicated that the McGrath Board believed the Revised WillScot Offer undervalued McGrath. Mr. Shuster further noted that there was non-public information of McGrath that would enable WillScot Mobile Mini to further increase its valuation of McGrath’s valuation which McGrath would share with WillScot Mobile Mini if a confidentiality agreement is executed between the parties. Mr. Shuster said McGrath might be open to a proposal that appropriately valued the company.

On November 29, 2021, Mr. Soultz reached out to Mr. Hanna via email to request a catch-up.

On December 3, 2021, Messrs. Hanna and Soultz had a telephone call whereby Mr. Soultz reiterated WillScot Mobile Mini’s interest in acquiring McGrath for $100.00 per share.

On December 3, 2021, at the direction of the Transaction Committee, Mr. Shuster spoke by telephone with Mr. Soultz and communicated to him that the per share consideration of $100.00 in the Revised WillScot Offer

 

41

undervalued McGrath. Mr. Shuster also outlined the value of McGrath’s Livermore and Mira Loma real estate that McGrath believed further increased its value. He noted that McGrath would share additional information about McGrath’s real estate portfolio subject to the parties executing a confidentiality agreement. Mr. Soultz relayed that WillScot Mobile Mini was not willing to increase the deal consideration beyond $100.00 per share.

On December 7, 2021, the Transaction Committee held a meeting, with McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs also in attendance, to discuss Mr. Shuster’s December 3, 2021 telephone call with Mr. Soultz. Representatives of Goldman Sachs summarized the December 4, 2021 call with Mr. Soultz, noting that Mr. Soultz reiterated WillScot Mobile Mini’s interest in acquiring McGrath for $100.00 per share. Following discussion of Mr. Shuster’s telephone call and the follow-up Goldman Sachs call, the Transaction Committee determined that it would be in the best interests of McGrath and its stockholders to have representatives of Goldman Sachs reach out to Mr. Soultz to gain additional insight into WillScot Mobile Mini’s current position. McGrath’s senior management and representatives of Goldman Sachs then left the meeting, and the M&F representative reviewed the updated disclosures made by Goldman Sachs in its disclosure letter in connection with Goldman Sachs’ engagement as financial advisor. The M&F representative noted that Goldman Sachs was part of the larger syndicate of banks in WillScot Mobile Mini’s credit facility, representing $50 million of WillScot Mobile Mini’s $3.7 billion credit facility. The Transaction Committee discussed the Goldman Sachs disclosures, as well as Goldman Sachs’ reputation, experience and knowledge of the industry and experience advising companies in mergers and acquisitions. Following further discussion, the Transaction Committee ratified the engagement letter with Goldman Sachs and reaffirmed its belief that Goldman Sachs was the most suitable financial advisor to advise McGrath on a potential transaction with WillScot Mobile Mini and other strategic opportunities that may be presented to it.

On December 8, 2021, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, the Transaction Committee discussed recommended next steps, including preparing a draft confidentiality agreement for distribution to WillScot Mobile Mini so the non-public real estate information may be shared, finalizing the real estate analysis and updating Goldman Sachs’ preliminary financial analyses of McGrath’s standalone prospects and the merits of the Revised WillScot Offer, after taking into consideration both the real estate value and management’s revised 2022 financial projections scheduled to be reviewed with the McGrath Board at its December 9, 2021 meeting.

On December 9, 2021, the McGrath Board held a meeting, with a representative of M&F in attendance. Messrs. Shuster and Hanna updated the McGrath Board on the current status of discussions with WillScot Mobile Mini, the terms of the Revised WillScot Offer and the results of follow-ups with WillScot Mobile Mini. The McGrath Board also discussed McGrath’s financial performance for the third quarter of 2021, the financial outlook for the remainder of the year and the financial plan for 2022. After further discussion, the McGrath Board determined that Goldman Sachs should update its preliminary financial analyses of McGrath’s standalone operations based on the updated financial information and value for the Livermore and Mira Loma real estate.

On December 20, 2021, the Transaction Committee held a meeting, at which McGrath senior management and a representative of M&F and representatives of Goldman Sachs were also present. Mr. Hanna reviewed management’s analysis of the value of the Livermore and Mira Loma real estate and representatives of Goldman Sachs discussed preliminary illustrative financial analyses of McGrath based on McGrath management’s updated long-term business plan and discussed the potential impact of McGrath’s real estate holdings on such illustrative financial analyses.

Also on December 20, 2021, as instructed by the McGrath Board, representatives of Goldman Sachs sent a draft of the confidentiality agreement to WillScot Mobile Mini.

On January 4, 2022, representatives of Goldman Sachs spoke by telephone with Mr. Soultz to discuss the Revised WillScot Offer.

 

42

On January 10, 2022, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, the representative of M&F summarized the status of negotiations of the draft confidentiality agreement with WillScot Mobile Mini, including WillScot Mobile Mini’s desire to limit the protected confidential information to only McGrath’s real estate analysis and refusal to include standstill or customer and employee non-solicitation provisions. The Transaction Committee noted its focus on maximizing shareholder value, including facilitating WillScot Mobile Mini’s understanding of the value of McGrath’s real estate holdings in relation to McGrath’s valuation. Following further discussion, the Transaction Committee authorized McGrath’s management to enter into a limited confidentiality agreement with WillScot Mobile Mini on the terms discussed.

On January 13, 2022, a confidentiality agreement between McGrath and WillScot Mobile Mini was executed specifically in relation to the sharing of McGrath’s real estate analysis.

On January 19, 2022, representatives of Goldman Sachs shared with WillScot Mobile Mini McGrath’s analysis of its real estate portfolio.

On January 19, 2022, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F were also present. At the meeting, McGrath’s senior management discussed a potential small acquisition and discussed the implications of such a transaction on the proposed transaction with WillScot Mobile Mini. This potential small acquisition ultimately did not move forward.

On January 21, 2022, at the direction of the Transaction Committee, Messrs. Hanna and Pratt and representatives of Goldman Sachs spoke to Mr. Soultz and Mr. Timothy Boswell, WillScot Mobile Mini’s President & Chief Financial Officer, regarding McGrath’s real estate portfolio.

On January 24, 2022, the Transaction Committee held a meeting, with McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs also present. The Transaction Committee discussed the January 21, 2022 meeting with WillScot Mobile Mini about McGrath’s real estate portfolio. The Transaction Committee agreed that it was prudent and in the best interests of McGrath to have representatives of Goldman Sachs contact Mr. Soultz to inquire as to WillScot Mobile Mini’s next steps after receipt of the real estate information and timing of such next steps. The Transaction Committee discussed the importance of understanding the viability of the potential transaction to maximize shareholder value, the need for management to focus its attention and resources on operating the business and the distraction presented if any potential transaction with WillScot Mobile Mini had no merits of maximizing shareholder value. The Transaction Committee then discussed various legal considerations with the M&F representative, including HSR regulatory considerations associated with a potential transaction with WillScot Mobile Mini.

On January 25 and 26, 2022, the Transaction Committee held meetings, at which McGrath’s senior management and a representative of M&F were also present. At the meetings, the Transaction Committee discussed WillScot Mobile Mini’s preliminary indication of interest in early 2021, as well as the discussions with WillScot Mobile Mini.

On January 27, 2022, a representative of Goldman Sachs and Mr. Soultz had a telephone call wherein they discussed the proposed transaction, WillScot Mobile Mini’s continued interest in acquiring McGrath for $100.00 per share in cash, and WillScot Mobile Mini’s rationale for not increasing McGrath’s valuation notwithstanding the receipt of the information regarding McGrath’s real estate holdings.

Following the call, the Transaction Committee met on January 27, 2022, with McGrath’s senior management, representatives of Goldman Sachs and a representative of M&F also present, and discussed Goldman Sachs’ January 27, 2022 telephone call. Thereafter, the Transaction Committee determined that it was prudent to provide the full McGrath Board with an update on the process.

 

43

On January 28, 2022, the McGrath Board held a meeting, with senior management and a representative of M&F also present. At the meeting, Mr. Hanna provided a chronology of engagements with WillScot Mobile Mini. Thereafter, the representative of M&F reviewed the McGrath Board’s fiduciary duties and other legal considerations in relation to the Board’s consideration of a potential transaction with WillScot Mobile Mini. The Transaction Committee provided its thoughts on next steps, including the potential benefits and drawbacks of conducting a market check to determine whether there are other viable acquirors of McGrath who could pay consideration at or above WillScot Mobile Mini’s current offer, strategies to maximize shareholder value and the importance of understanding deal certainty in light of WillScot Mobile Mini’s acquisition financing requirements and regulatory considerations. After further discussion, the McGrath Board agreed that to maximize shareholder value, it was prudent for the Transaction Committee to instruct representatives of Goldman Sachs to contact Party A to gauge its interests in acquiring McGrath at or above the valuation provided by WillScot Mobile Mini. The McGrath Board further determined that McGrath did not have sufficient information to determine whether the proposed transaction with WillScot Mobile Mini was in the best interests of McGrath and its shareholders.

On February 1, 2022, Mr. Shuster and Mr. Soultz met at the San Francisco offices of M&F and discussed at high level the proposed transaction, including the potential value of McGrath’s real estate portfolio, details of how WillScot Mobile Mini would finance the proposed transaction and the scope and timetable for due diligence to be conducted by WillScot Mobile Mini. Mr. Shuster also told Mr. Soultz that McGrath was not prepared to provide exclusivity to WillScot in light of McGrath being a public company and the present deal valuation.

On February 2, 2022, the Transaction Committee held a meeting, with a representative of M&F also present. At the meeting, Mr. Shuster updated the Transaction Committee regarding the February 1, 2022 meeting. Mr. Shuster further discussed that Mr. Soultz declined to recognize additional value in McGrath’s Mira Loma and Livermore properties and relayed WillScot Mobile Mini’s rationale for why the real estate was already contemplated in its valuation of McGrath. Mr. Shuster advised that Mr. Soultz agreed to update the Revised WillScot Offer but the exact timing of delivery of such update was unclear.

Later on February 4, 2022, WillScot Mobile Mini submitted a revised non-binding written offer reiterating its all-cash offer of $100.00 per share (the “February 4, 2022 WillScot Offer”).

On February 4, 2022, following receipt of the offer, the Transaction Committee held a meeting, with McGrath’s senior management and a representative of M&F also in attendance. Senior management provided their views of the February 4, 2022 WillScot Offer. The representative of M&F summarized the legal considerations and potential next steps associated with the offer. The Transaction Committee discussed the appropriateness of conducting a market check with Party A at this time and the directive to representatives of Goldman Sachs to contact the Chief Executive Officer of Party A to gauge Party A’s interests in a potential strategic transaction with McGrath.

During the week of February 7, 2022, representatives of Goldman Sachs had a call with Party A’s Chief Executive Officer. During the call, a variety of potential acquisition targets, including McGrath was discussed, and Party A’s Chief Executive Officer did not express interest in McGrath.

On February 7, 2022, WillScot Mobile Mini sent a draft confidentiality agreement to McGrath in relation to the proposed transaction, which did not include a standstill.

On February 10, 2022, M&F sent a revised draft confidentiality agreement to in-house counsel of WillScot Mobile Mini, and Mr. Shuster responded to Mr. Soultz that the McGrath Board would review the February 4, 2022 WillScot Offer at its next board meeting and would revert thereafter.

On February 12, 2022, the McGrath Board held a meeting, with senior management and a representative of M&F and representatives of Goldman Sachs also present. At the meeting, Mr. Shuster summarized the recent engagements with WillScot Mobile Mini, and the review and analysis undertaken by the Transaction Committee in relation to WillScot Mobile Mini’s various proposals to acquire McGrath. The Board then discussed the

 

44

current WillScot Mobile Mini proposal undervaluing McGrath and failing to take into account the value of McGrath’s Livermore and Mira Loma real estate. Representatives of Goldman Sachs and the M&F representative summarized the key differences between the Revised WillScot Offer in August 2021 and the February 4, 2022 WillScot Offer. The representative of M&F reviewed the McGrath Board’s fiduciary duties and other legal considerations in relation to the Board’s consideration of a potential transaction with WillScot Mobile Mini. Representatives of Goldman Sachs presented preliminary illustrative financial analyses of the February 4, 2022 WillScot Offer. The Transaction Committee noted its instruction to representatives of Goldman Sachs to contact Party A to gauge its interests in acquiring McGrath at or above the valuation provided by WillScot Mobile Mini. Representatives of Goldman Sachs then summarized the call with the Chief Executive Officer of Party A whereby a variety of potential acquisition targets, including McGrath was discussed, and Party A’s Chief Executive Officer did not express interest in McGrath. After further discussion and review of the February 4, 2022 WillScot Offer, and in consideration of the guidance from representatives of M&F, as well as the outcome of Goldman Sachs’ discussion with Party A, the McGrath Board agreed to permit WillScot Mobile Mini to conduct further diligence on McGrath, subject to execution of an appropriate confidentiality agreement, while concurrently engaging with WillScot Mobile Mini to increase the deal consideration to maximize shareholder value.

On February 16, 2022, Mr. Shuster spoke by telephone with Mr. Soultz about the current deal consideration undervaluing McGrath and failing to take into account the value of McGrath’s Livermore and Mira Loma real estate. Mr. Shuster noted McGrath’s refusal to agree to exclusivity as requested by WillScot Mobile Mini. Mr. Shuster also asked WillScot Mobile Mini to consider a more accelerated timeline than the one set forth in the February 4, 2022 WillScot Offer, as well as provide additional information regarding WillScot Mobile Mini’s acquisition financing.

On February 17, 2022, the McGrath Board held a meeting, with senior management present and a representative of M&F joining for a portion of the meeting. At the meeting, the Transaction Committee provided an update on discussions with WillScot Mobile Mini.

On February 23, 2022, Mr. Shuster again spoke by telephone with Mr. Soultz. Mr. Soultz provided feedback following deliberation by the board of directors of WillScot Mobile Mini during its regular meeting on February 22, 2022. He noted that WillScot Mobile Mini remained confident in its ability to provide further financing certainty and to pursue an accelerated deal timeline, assuming full and expeditious support of McGrath. Mr. Soultz further acknowledged that McGrath’s real estate portfolio could present some potential upside, but there were additional costs and risks of such real estate portfolio and therefore WillScot Mobile Mini remained firm at deal consideration of $100.00 per share. Mr. Soultz agreed to provide a revised indication of interest letter with a term sheet, a revised confidentiality agreement, the diligence scope and a transaction timeline on or before March 9, 2022.

On February 23, 2022, representatives of Goldman Sachs, at the instruction of the Transaction Committee, spoke by telephone with Mr. Soultz to get WillScot Mobile Mini’s rationale for its valuation of McGrath and its views on the value of McGrath’s Livermore and Mira Loma real estate.

On February 28, 2022, the McGrath Board held a meeting, with senior management and a representative of M&F and representatives of Goldman Sachs also present. At the meeting, Mr. Shuster summarized the recent engagements with WillScot Mobile Mini and Mr. Soultz noting that more time is needed to consider McGrath’s real estate portfolio in relation to the McGrath valuation. McGrath senior management then updated the McGrath Board on its preliminary analysis of the value of McGrath’s real estate portfolio. The representative of M&F reviewed the McGrath Board’s fiduciary duties and other legal considerations in relation to the Board’s consideration of a potential transaction with WillScot Mobile Mini.

On March 8, 2022, Mr. Soultz spoke to Mr. Shuster and informed Mr. Shuster that WillScot Mobile Mini was pausing any further consideration of a potential transaction at the present time given the volatility in the

 

45

financing market and broader economic outlook, exacerbated by the outbreak of war in Ukraine, all of which increased the costs and risks associated with the proposed transaction. Following this communication, McGrath disengaged.

On March 11, 2022, Mr. Shuster received an email from Mr. Soultz requesting that McGrath permit WillScot Mobile Mini’s outside counsel to conduct preliminary antitrust analysis while the proposed transaction was on hold. Following the email communication, the Transaction Committee met with a representative of M&F and representatives of Goldman Sachs in attendance. At the meeting, the representative of M&F presented and discussed the email communication. After considering the high risk of leaks in any prolonged engagement with WillScot Mobile Mini, the lack of deal certainty and the insufficient deal consideration, the Transaction Committee determined not to allow the preliminary antitrust analysis to commence. The Transaction Committee instructed Mr. Shuster to communicate this position to Mr. Soultz, which Mr. Shuster did.

On March 11, 2022, the McGrath Board held a meeting, with senior management and a representative of M&F and a representative of Goldman Sachs also present. At the meeting, Mr. Shuster summarized the recent engagements with WillScot Mobile Mini, including WillScot Mobile Mini’s message that it was not in a position to move forward with a potential transaction with McGrath at the present time. After discussion, the McGrath board determined that McGrath should resume normal operations and focus on executing its strategic plan.

On March 15, 2022, the Transaction Committee held a meeting with a representative of M&F present to discuss various strategic options that McGrath should consider in light of the discontinuation of engagement with WillScot Mobile Mini and determined to discuss these topics with the full McGrath Board at its next regular meeting.

On March 17, 2022, the McGrath Board had a meeting at which senior management and a representative of M&F were also present. At the meeting, at the request of the Transaction Committee, the M&F representative discussed potential next steps after discontinuation of engagement with WillScot Mobile Mini.

On April 22, 2022, the McGrath Board held a meeting, with senior management and representatives of Goldman Sachs also present. The representative of Goldman Sachs discussed general economic conditions, public market perspectives and strategic alternatives for consideration.

On February 1, 2023, McGrath announced the acquisition of Vesta Modular for $400 million and the concurrent divestiture of Adler Tank Rentals for $265 million.

On or about April 4, 2023, Mr. Soultz reached out to Mr. Hanna to request a lunch, which subsequently occurred on April 10, 2023, with Mr. Shuster and Mr. Boswell also in attendance. At the lunch, Mr. Soultz informed Messrs. Hanna and Shuster of WillScot Mobile Mini’s continued interest in acquiring McGrath.

On April 28, 2023, in a meeting with Messrs. Shuster, Hanna and Soultz, Mr. Soultz verbally communicated WillScot Mobile Mini’s intention to put forward an updated and improved non-binding all-cash offer of $105.00 per share.

On May 9, 2023, WillScot Mobile Mini submitted a written non-binding all-cash offer to acquire McGrath at $106.50 per share (the “May 9, 2023 WillScot Offer”). The May 9, 2023 WillScot Offer set forth a substantially similar financing approach as the prior proposals, namely that WillScot Mobile Mini intended to finance the proposed transaction with a combination of cash, borrowings under its existing credit facility (supplemented by an incremental facility) and the issuance of debt securities, as well as proposed timetable for the transaction.

On May 12, 2023, the Transaction Committee, with Ms. Kimberly A. Box, another member of the McGrath Board, joining in place of Mr. Smith, McGrath’s senior management, and a representative of M&F and

 

46

representatives of Goldman Sachs also in attendance, held a meeting to discuss recent engagements with WillScot Mobile Mini and potential next steps in light of the May 9, 2023 WillScot Offer, and Mr. Shuster provided a summary of recent engagements with Mr. Soultz and reviewed prior discussions with WillScot Mobile Mini. Representatives of Goldman Sachs also reviewed recent trends in McGrath’s stock trading patterns, market trends and preliminary views on the impact of WillScot Mobile Mini’s capital structure on its ability to finance a transaction with McGrath. The Transaction Committee discussed the May 9, 2023 WillScot Offer and various strategic considerations for re-engaging with WillScot Mobile Mini. The representative of M&F provided legal considerations of strategic next steps and summarized the McGrath Board’s fiduciary duties with regards to the May 9, 2023 WillScot Offer. Following discussion, the Transaction Committee determined that it was prudent for Mr. Shuster to contact Mr. Soultz to express the McGrath Board’s disappointment in the deal consideration, the lack of specificity with WillScot Mobile Mini’s proposed financing in light of McGrath’s prior experience with WillScot Mobile Mini and the delayed deal timetable proposed by WillScot Mobile Mini.

On May 16, 2023, Messrs. Shuster and Soultz discussed the May 9, 2023 WillScot Offer by telephone. Mr. Shuster communicated three primary areas of focus of the May 9, 2023 WillScot Offer: financing certainty, time to closing, and, while appreciative of the increased valuation, there would need to be material increase in the valuation prior to McGrath being willing to seriously engage with WillScot Mobile Mini again.

On May 17, 2023, the Transaction Committee, with Ms. Box, McGrath’s senior management, and a representative of M&F and representatives of Goldman Sachs also in attendance, held a meeting. At the meeting, Mr. Shuster provided the Transaction Committee with an update regarding his May 16 telephone call with Mr. Soultz.

On May 22, 2023, WillScot Mobile Mini submitted a written non-binding offer reiterating a deal consideration of $106.50 per share (the “May 22, 2023 WillScot Offer”), which included additional information on financing approach and planned transaction execution timeline. The communication also included a draft confidentiality agreement for consideration.

On May 23, 2023, the Transaction Committee, with Ms. Box, McGrath’s senior management, and a representative of M&F and representatives of Goldman Sachs also in attendance, held a meeting to discuss the May 22, 2023 WillScot Offer and reviewed Mr. Shuster’s proposed response to such offer. The M&F representative also discussed the terms of the draft confidentiality agreement. After further discussion, the Transaction Committee authorized M&F to negotiate an acceptable confidentiality agreement with WillScot Mobile Mini. Mr. Hanna also informed the Transaction Committee that management’s review of McGrath’s updated five-year projections and business plan, as well as discussions with representatives of Goldman Sachs regarding the May 22, 2023 WillScot Offer would occur at the McGrath Board meeting scheduled for June 7, 2023.

On May 23, 2023, Mr. Shuster and Mr. Soultz had another telephone call whereby Mr. Shuster reiterated that there would need to be a material increase in the valuation prior to McGrath being willing to seriously engage with WillScot Mobile Mini again.

On May 26, 2023, WillScot Mobile Mini submitted a revised written offer reiterating its valuation of $106.50 per share (the “May 26, 2023 WillScot Offer”). The offer also provided additional details regarding the financing for the potential transaction, as well as an updated timeline that was more accelerated than prior iterations.

On May 31, 2023, the Transaction Committee held a meeting, with Ms. Box, McGrath’s senior management, and a representative of M&F and representatives of Goldman Sachs also present. The Transaction Committee reviewed the May 26, 2023 WillScot Offer, noting that the offer did not include satisfactory detail on WillScot Mobile Mini’s proposed financing of the potential transaction, which was a significant concern of the Transaction Committee in light of the parties’ prior negotiations. The Transaction Committee discussed, with the

 

47

representative of M&F and representatives of Goldman Sachs, a potential response to the May 26, 2023 WillScot Offer that would reiterate that the offer undervalued McGrath, and instructed representatives of Goldman Sachs and the M&F representative to work together to draft such a response for the Transaction Committee’s review.

On June 1, 2023, Mr. Shuster sent a letter to Mr. Soultz reiterating that the non-binding all-cash offer of $106.50 per share materially undervalued McGrath, that the McGrath Board remained confident in management’s ability to execute McGrath’s strategic plan and that there would need to be a material increase in the valuation prior to McGrath being willing to seriously engage with WillScot Mobile Mini again.

On June 7, 2023, the McGrath Board held a meeting, at which senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, the McGrath Board appointed Ms. Box to the Transaction Committee effective immediately in light of the retirement of Mr. Smith from the McGrath Board. At the meeting, Messrs. Hanna and Pratt reviewed McGrath’s updated five-year financial projections which was overall more positive than the prior plan, the assumptions and rationale underlying the projections, the material differences to the prior plan and specificity on the modular and TSR businesses. Messrs. Shuster and Hanna also provided a summary of the recent engagements with WillScot Mobile Mini and the status of discussions. Following these discussions, the representative of M&F provided legal input on the May 26, 2023 WillScot Offer and the McGrath Board’s fiduciary duties in relation to such offer. Representatives of Goldman Sachs presented preliminary illustrative financial analyses of McGrath, based on the updated projected financial information and business plans of McGrath as provided by and approved for Goldman Sachs’ use by McGrath management, and the McGrath Board discussed the cash consideration of $106.50 per share proposed to be paid by WillScot Mobile Mini in light of the preliminary financial analyses. Mr. Shuster communicated to the McGrath Board that, due to the history of prior negotiations with WillScot Mobile Mini regarding a potential transaction, the lack of specificity of WillScot Mobile Mini’s financing details, the McGrath Board’s confidence in management’s execution of McGrath’s strategic plan, the risk of market leaks and diversion of management’s time and attention from executing McGrath’s business plan to address WillScot Mobile Mini’s offers, the Transaction Committee recommended that McGrath defer further engagement with WillScot Mobile Mini until it increased the deal consideration to appropriately value McGrath, and the McGrath Board concurred.

On June 15, 2023, Messrs. Shuster and Hanna met with Mr. Soultz to discuss the May 26, 2023 WillScot Offer and again noted their view that the current deal consideration significantly undervalued McGrath.

On June 16, 2023, the Transaction Committee held a meeting with McGrath’s senior management and a representative of M&F and a representative of Goldman Sachs also present. Mr. Shuster provided the Transaction Committee with an update regarding the June 15, 2023 meeting, noting that there were no significant developments resulting from the meeting.

On July 7, 2023, McGrath received from WillScot Mobile Mini a revised written non-binding all cash offer for $108.00 per share (the “July 7, 2023 WillScot Offer”). Later that day, Mr. Shuster had a telephone call with Mr. Soultz to discuss the July 7, 2023 WillScot Offer and conveyed his expectation that the Transaction Committee would not be satisfied with the revised offer.

On July 10, 2023, the Transaction Committee held a meeting, with McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs also present. At the meeting, the Transaction Committee discussed the July 7, 2023 WillScot Offer. The Transaction Committee concurred that other than the minor increase to the per share price, the July 7, 2023 WillScot Offer did not differ materially from the May 26, 2023 WillScot Offer and did not include the specific detail regarding the financing of the transaction requested by McGrath. At Mr. Shuster’s request, representatives of Goldman Sachs reviewed the financial terms of the July 7, 2023 WillScot Offer and the Transaction Committee discussed potential next steps to respond to the offer. Following discussion, the Transaction Committee determined that the appropriate next step would be for Mr. Shuster to have another telephone call with Mr. Soultz to discuss McGrath’s dissatisfaction with the latest offer and suggest that to bridge the value gap, McGrath would entertain a revised proposal that includes a meaningful stock component (in excess of 50%) for the deal consideration.

 

48

On July 14, 2023, Mr. Shuster sent a written response to Mr. Soultz stating that the Transaction Committee believed that WillScot Mobile Mini’s revised offer of $108.00 per share continued to undervalue McGrath and that it would be willing to consider a transaction with WillScot Mobile Mini only if there is a meaningful increase to the deal consideration. The letter further stated that to bridge the value gap, McGrath would entertain a revised proposal that includes a meaningful stock component (in excess of 50%) for the deal consideration.

On July 19, 2023, Mr. Soultz called Mr. Shuster and said that a revised offer was forthcoming. Later that day, WillScot Mobile Mini submitted a revised written non-binding offer for $108.00 per share with 30% stock consideration (the “July 19, 2023 WillScot Offer”). Other aspects of the offer remained substantially the same as prior offers.

On July 24, 2023, the Transaction Committee held a meeting, which was attended by McGrath’s senior management and a representative of M&F and a representative of Goldman Sachs. At the meeting, the Transaction Committee discussed the July 19, 2023 WillScot Offer. A representative of Goldman Sachs reviewed the financial terms of the July 19, 2023 WillScot Offer. Senior management also discussed McGrath’s positive second quarter 2023 financial results and potential positive effect of such results on McGrath’s stock price. The Transaction Committee discussed potential next steps to respond to the July 19, 2023 WillScot Offer and strategies to increase WillScot Mobile Mini’s proposed deal consideration as the Transaction Committee believed the July 19, 2023 WillScot Proposal was insufficient. After further discussion, the Transaction Committee determined that the most appropriate next step was for Mr. Shuster to send a written response to Mr. Soultz to reiterate the insufficiency of the deal consideration and instructed representatives of Goldman Sachs and M&F to prepare the initial draft of the written response.

Following the meeting, Mr. Shuster sent a written response on July 24, 2023 to WillScot Mobile Mini confirming that McGrath continued to view the offer of $108.00 per share as insufficient and that McGrath was focused on a transaction with at least 50% of the consideration comprised of WillScot Mobile Mini Common Stock.

On August 8, 2023, Mr. Shuster had an in-person meeting with Mr. Soultz at which Mr. Shuster indicated that McGrath was undertaking a review of its strategic plan and financial outlook and as a result will revert on next steps with WillScot Mobile Mini at a future time, including revisiting the prior confidentiality agreement which had since expired.

On September 14, 2023, WillScot Mobile Mini sent a revised draft confidentiality agreement to McGrath.

On September 15, 2023, the McGrath Board held a meeting, with a representative of M&F and a representative of Goldman Sachs present. At the meeting, Messrs. Hanna and Shuster provided a summary of their recent engagements with WillScot Mobile Mini and the representative of M&F summarized the status of the confidentiality agreement negotiations and the material changes proposed by McGrath. Messrs. Hanna and Pratt presented McGrath’s updated financial projections through fiscal year 2027 which were more positive than the prior projections and the McGrath Board discussed the outlook and reasons for the positive changes in the projections. A representative of Goldman Sachs also discussed with the McGrath Board preliminary illustrative financial analyses of McGrath based on McGrath management’s updated projections. The McGrath Board discussed the presentations by McGrath management and a representative of Goldman Sachs and concluded that the July 19, 2023 WillScot Offer materially undervalued McGrath. The representative of M&F again reviewed McGrath Board’s fiduciary duties in consideration of the July 19, 2023 WillScot Offer, and provided legal input regarding strategic next steps, timing, and other legal considerations.

On September 15, 2023, McGrath sent a mark-up of the revised draft confidentiality agreement back to WillScot Mobile Mini with standstill and customer and employee non-solicitation provisions.

Between September 15-19, 2023, a representative of M&F and a member of WillScot Mobile Mini’s in-house legal department negotiated the draft confidentiality agreement.

 

49

On September 19, 2023, McGrath entered into a confidentiality agreement with WillScot Mobile Mini, which included a standstill with “fall-way” provisions under certain circumstances and non-solicitation of employees and customers provisions.

On September 25, 2023, Messrs. Shuster and Hanna had a zoom meeting with Messrs. Soultz and Boswell regarding the proposed deal consideration whereby they reiterated the McGrath Board’s view that the July 19, 2023 WillScot Offer materially undervalued McGrath.

On September 29, 2023, the Transaction Committee held a meeting, with McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs also present. Mr. Shuster provided an update regarding the September 25, 2023 zoom meeting, and the Transaction Committee discussed their impressions and opinions of the deal process to date. At Mr. Shuster’s request, representatives of Goldman Sachs discussed preliminary illustrative financial analyses of McGrath on a standalone basis based on the updated forecasts and discussed the potential valuation approaches that may be used by WillScot Mobile Mini to value McGrath. The Transaction Committee discussed the potential synergies to be derived from the proposed transaction and how those synergies could provide a basis for increasing the deal consideration. The Transaction Committee discussed potential next steps to respond to WillScot Mobile Mini and reiterated their confidence in management’s execution of McGrath’s business plan.

On October 20, 2023, Mr. Soultz called Mr. Shuster to discuss a potential revised offer of $113 to 115 per share, with various mixes of cash and stock consideration (the “Verbal Proposal”).

On October 23, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were present. Mr. Shuster provided a summary of the October 20, 2023 telephone call and the Verbal Proposal. The Transaction Committee discussed the increase in the proposed purchase price. The representative of M&F discussed the various considerations regarding the Verbal Proposal and the Transaction Committee discussed the preferred cash and stock mix of any potential transaction with WillScot Mobile Mini. The Transaction Committee determined that, after taking into consideration the potential benefits and risk associated with the stock consideration, including the tax benefit and fluctuation in the stock of WillScot Mobile Mini, that a 50-50 cash and stock would be the preferred mix for the deal consideration. Following discussion, the Transaction Committee determined that it would be appropriate for Mr. Shuster to have another telephone call with Mr. Soultz to communicate the Transaction Committee’s cash and stock mix proposal and request that WillScot Mobile Mini submit an appropriately revised version of the Verbal Proposal in writing.

On October 25, 2023, the Transaction Committee held a meeting at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, representatives of Goldman Sachs summarized the financial terms of the Verbal Proposal. The Transaction Committee and the representative of M&F discussed various legal considerations associated with the Verbal Proposal, including considerations associated with deal certainty, the antitrust analysis and McGrath shareholder approval logistics, as well as risks and legal considerations associated with market leaks. Members of the Transaction Committee, with senior management and the representatives of Goldman Sachs, again discussed companies that might be interested in acquiring McGrath, and the ability of such companies to acquire McGrath at or above WillScot Mobile Mini’s current offer. The Transaction Committee further discussed the potential risks and benefits of reaching out to a broader group of potential acquirors, including the potentially significant harm to McGrath and its business should discussions about a possible sale leak publicly. After further discussion, the Transaction Committee determined that Party A remained the most viable party for consideration. With input from a representative of M&F and representatives of Goldman Sachs, the Transaction Committee discussed next steps regarding WillScot Mobile Mini.

On October 27, 2023, Mr. Shuster called Mr. Soultz to request a written indication of interest confirming the Verbal Proposal and providing consideration of at least $115 per share with 50% stock consideration. Following the telephone call, the Transaction Committee held a meeting and Mr. Shuster provided a summary of the call.

 

50

On November 2, 2023, Mr. Soultz called Mr. Shuster to note that a revised offer was forthcoming. WillScot Mobile Mini thereafter sent a revised written non-binding offer at $115.00 per share with 30% stock consideration (the “November 2, 2023 WillScot Offer”). The offer included a request for exclusivity but other aspects of the offer remained substantially the same as prior offers.

On November 6, 2023, Mr. Soultz reached out to Mr. Shuster via email and noted that WillScot Mobile Mini had executed two highly confident letters with two institutional banks in relation to its financing of the proposed transaction.

On November 8, 2023, the Chief Executive Officer of Party A contacted representatives of Goldman Sachs to discuss a variety of potential acquisition targets with one such target being McGrath which Party A’s Chief Executive Officer said was an asset that his organization monitored closely and was interested in acquiring.

On November 8, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. The Transaction Committee reviewed the November 2, 2023 WillScot Offer and representatives of Goldman Sachs discussed the financial terms of the November 2, 2023 WillScot Offer. The Transaction Committee noted the request for exclusivity in the November 2, 2023 WillScot Offer and the representative of M&F reviewed various legal considerations associated with the exclusivity request and discussed the need for a 40% stock consideration mix in order for the shareholders of McGrath to receive tax-deferred treatment for the stock portion of the consideration. Following the discussion, the Transaction Committee determined to revert with a counterproposal of $117.00 per share with a 60% cash and 40% stock mix and rejection of the exclusivity request. Representatives of Goldman Sachs then discussed with the Transaction Committee potential considerations related to pursuing a market check with Party A. Following discussion, the Transaction Committee instructed representatives of Goldman Sachs to share with Party A that McGrath had received a bona fide offer from an alternative buyer in the same space with a significant premium to McGrath’s then current stock price, and to inquire whether Party A was interested in putting forward a proposal to acquire 100% of McGrath at a specific valuation. Representatives of Goldman Sachs were also instructed to share a draft confidentiality agreement with a standstill that was prepared by M&F with Party A. The Transaction Committee and Mr. Hanna then discussed the personnel and time needed to engage in a diligence process with WillScot Mobile Mini and after discussion and consideration, authorized Mr. Hanna to discuss the potential transaction with WillScot Mobile Mini with certain members of McGrath’s senior management to facilitate the diligence process.

On November 9, 2023, representatives of Goldman Sachs and Party A’s Chief Executive Officer spoke by telephone as directed by the Transaction Committee and on the call Party A was asked to submit its non-binding offer prior to the Thanksgiving holiday.

On November 10, 2023, Mr. Shuster told Mr. Soultz that McGrath would be willing to move forward with due diligence at a valuation of $117.00 per share with 40% stock consideration but was not willing to agree to exclusivity.

On November 13, 2023, as instructed by the Transaction Committee, representatives of Goldman Sachs shared the confidentiality agreement with Party A and reiterated McGrath’s request that Party A, prior to the Thanksgiving holiday, submit a proposal to acquire McGrath based on public information.

On November 16, 2023, Messrs. Shuster and Soultz spoke by telephone regarding the potential transaction and, later the same day, WillScot Mobile Mini sent a revised written non-binding offer at $115.00 per share with 40% stock consideration (the “November 16, 2023 WillScot Offer”). Other aspects of the offer remained substantially the same as prior offers.

On November 20, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At Mr. Shuster’s request

 

51

representatives of Goldman Sachs reviewed the economic terms of the November 16, 2023 WillScot Offer. Thereafter a discussion ensued whereby the Transaction Committee discussed strategies to improve WillScot Mobile Mini’s offer. Representatives of Goldman Sachs also reiterated Party A’s interest to further explore a transaction with McGrath. The Transaction Committee then discussed strategic next steps, timing and other legal considerations.

After the Transaction Committee Meeting, on the same date, Mr. Shuster had another telephone call with Mr. Soultz, wherein he informed Mr. Soultz that while McGrath appreciated the change in consideration mix, the purchase price per share was insufficient and that Mr. Shuster believed that if WillScot Mobile Mini increased its offer to $116.00 per share, the McGrath Board would be willing to move forward with due diligence process.

On November 21, 2023, Mr. Soultz called Mr. Shuster to note that a revised offer was forthcoming. Thereafter, WillScot Mobile Mini sent a revised written non-binding offer at $116.00 per share with 40% stock consideration (the “November 21, 2023 WillScot Offer”). Other aspects of the offer remained substantially the same as prior offers.

Also on November 21, 2023, Party A’s Head of M&A called representatives of Goldman Sachs, stating that following the Thanksgiving Holiday, Party A intended to put forward a written non-binding all-cash offer to acquire 100% of McGrath at $120.00 per share, and McGrath and Party A executed a confidentiality agreement, substantially similar to the WillScot Mobile Mini confidentiality agreement, which included standstill with “fall-way” provisions under certain circumstances and employee and customer non-solicitation provisions.

On November 27, 2023, the respective Chief Executive Officers, Chief Financial Officers and General Counsels of McGrath and WillScot Mobile Mini had a conference call to discuss next steps and various legal logistics.

On November 28, 2023, Party A delivered a written non-binding offer to acquire all of the outstanding equity of McGrath at $120.00 per share in cash (the “Party A Offer”).

On November 29, 2023, the McGrath Board held a meeting, with senior management and a representative of M&F and representatives of Goldman Sachs also present. Messrs. Hanna and Shuster and the representative from M&F and representatives of Goldman Sachs updated the meeting participants on recent developments with WillScot Mobile Mini and Party A. McGrath’s senior management discussed McGrath’s revised, more positive, preliminary financial projections of the company on a standalone basis and summarized the reasons for the variance from the previously presented projections. After further discussion, the McGrath Board approved the updated projections and authorized the McGrath management to share such projections with both WillScot Mobile Mini and Party A. Representatives of Goldman Sachs provided preliminary financial analyses of the November 21, 2023 WillScot Offer and the Party A Offer based on the updated projections. The representative of M&F again reviewed McGrath Board’s fiduciary duties in consideration of the November 21, 2023 WillScot Offer and the Party A Offer, and provided legal input regarding strategic next steps, timing, and other legal considerations.

On November 29, 2023 and subsequent to the McGrath Board meeting, WillScot Mobile Mini provided a letter of intent, which included a simplified term sheet that generally outlined the deal consideration, transaction structure, required consents, regulatory approvals and the timing of a clearance filing under the HSR (the “HSR filing”) and closing conditions of the parties for consummation of the proposed transaction, interim operating covenants and fees and expenses (the “WillScot Mobile Mini LOI”), to McGrath.

On November 30, 2023, Mr. Shuster, Mr. Hanna and representatives of Goldman Sachs held a videoconference with Party A’s Chief Executive Officer and Head of M&A whereby Party A reiterated its interest and willingness to move forward with a proposed transaction without any financing contingency.

 

52

On November 30, 2023, in furtherance of the parties’ intent to share potentially competitively sensitive information with each other with a view to conducting a more detailed competition analysis of the proposed combination, the General Counsel of McGrath delivered a form of clean team confidentiality agreement to the General Counsel of WillScot Mobile Mini. It was finalized and executed by McGrath and WillScot Mobile Mini on the same day.

On December 1, 2023, M&F provided a form of clean team confidentiality agreement to the General Counsel of Party A. Between December 1, 2023 and December 7, 2023, the General Counsel of Party A and M&F exchanged mark-ups of the clean team confidentiality agreement. On December 7, 2023, the clean team confidentiality agreement was finalized and McGrath exchanged signature pages with Party A.

Between December 5-8, 2023, representatives of M&F and Allen & Overy LLP (“A&O”), outside counsel for WillScot Mobile Mini, negotiated the WillScot Mobile Mini LOI.

On December 5, 2023, McGrath opened its virtual data room (the “WillScot Mobile Mini VDR”) for WillScot Mobile Mini, and on December 6, 2023, McGrath opened the same virtual data room (the “Party A VDR”) for Party A. From December 5, 2023 until January 27, 2024, WillScot Mobile Mini and its external advisors conducted due diligence on McGrath. From December 7, 2023 to December 21, 2023, Party A and its outside legal counsel conducted similar diligence on McGrath.

On December 6, 2023, M&F delivered to A&O a list of preliminary due diligence requests in relation to reverse due diligence of WillScot Mobile Mini. From December 6, 2023 until January 22, 2024, McGrath and its external advisors conducted reverse due diligence on WillScot Mobile Mini.

On December 7, 2023, the Transaction Committee held a meeting, at which the other McGrath directors who are not on the Transaction Committee, McGrath’s senior management, a representative of M&F and a representative of Goldman Sachs were also present. At Mr. Shuster’s request, the representative from M&F and the representative of Goldman Sachs updated the meeting participants on recent developments with WillScot Mobile Mini and Party A, including the opening of the data rooms for both parties and the scheduling of in-person management financial presentations for Party A. The M&F representative discussed the execution of clean team agreements with both WillScot Mobile Mini and Party A relating to access to competitively sensitive information of McGrath, the finalization of the WillScot Mobile Mini LOI and timing for receipt of a draft merger agreement from WillScot Mobile Mini, and the preparation of a form of merger agreement for Party A. The Transaction Committee then discussed next steps and timing of the proposed transaction, as well as logistics associated with managing both WillScot Mobile Mini and Party A concurrently. The Transaction Committee and Mr. Hanna then discussed the personnel and time needed to engage in a diligence process with Party A and after discussion authorized Mr. Hanna to discuss the potential transaction with Party A with certain members of McGrath’s senior management to facilitate the diligence process.

On December 8, 2023, McGrath and WillScot Mobile Mini executed the WillScot Mobile Mini LOI. Separately, Mr. Boswell informed Mr. Pratt that WillScot Mobile Mini was in negotiations with six potential financing sources for the acquisition financing.

On December 10, 2023, WillScot Mobile Mini provided to McGrath a more detailed term sheet for the merger agreement (the “WillScot Mobile Mini Term Sheet”) to facilitate further discussion and negotiation of the transaction terms prior to circulation of a draft merger agreement.

On December 14-15, 2023, McGrath hosted a dinner for representatives of Party A followed by an in-person management presentation of McGrath’s five-year financial projections, which the Chief Executive Officer of Party A attended virtually.

On December 15, 2023, WillScot Mobile Mini determined not to proceed with negotiating the WillScot Mobile Mini Term Sheet and instead A&O delivered a draft of a merger agreement to M&F.

 

53

On December 18, 2023, M&F delivered an initial draft merger agreement to counsel for Party A. Also, on December 18, 2023, pursuant to WillScot Mobile Mini’s requests, diligence calls related to human resources, tax and accounting, were attended by WillScot Mobile Mini, WillScot Mobile Mini’s representatives, and McGrath’s representatives.

On December 19, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. At the meeting, the representative of M&F and representatives of Goldman Sachs summarized the current status of discussions with WillScot Mobile Mini and Party A. The M&F representative discussed the significant provisions in the draft merger agreement recently distributed by A&O, including the implications of such provisions for deal certainty and the McGrath Board’s ability to pursue superior proposals, an update of the legal and financial due diligence conducted by WillScot Mobile Mini, the distribution of a draft merger agreement to Party A’s legal counsel and the initiation of the reverse due diligence of WillScot Mobile Mini. The M&F representative further discussed the benefits and risks associated with making the HSR filing pursuant to the WillScot Mobile Mini LOI prior to execution and announcement of a merger agreement, including potential expediency in satisfying the regulatory closing condition, and also noted the potential for leaks if the HSR filing was made prior to execution of a merger agreement. The M&F representative noted that WillScot Mobile Mini had proposed such a filing. After reviewing the benefits and risks of such a filing and based on M&F’s recommendation, the Transaction Committee authorized M&F to coordinate with A&O to proceed with such HSR filing based on the WillScot Mobile Mini LOI. Representatives of Goldman Sachs discussed the recent increase in stock prices of each of McGrath, WillScot Mobile Mini and Party A, as well as the comparative rise of such stocks. The Transaction Committee then discussed strategies to incentivize both WillScot Mobile Mini and Party A to increase their deal consideration in light of the rise in McGrath’s stock price. McGrath senior management summarized the financial presentation made to Party A and the positive reception of such presentation by Party A. After further discussion, the Transaction Committee agreed to continue engagement with both WillScot Mobile Mini and Party A, as well as monitor McGrath’s stock movement and further discuss strategies to maximize shareholder value.

On December 19, 2023, a representative of Goldman Sachs contacted Mr. Boswell requesting WillScot Mobile Mini’s standalone financial projections for purposes of completing its fairness opinion and discussed the comparative trading of the WillScot Mobile Mini Common Stock and McGrath Common Stock.

Also on December 19, 2023, representatives of McGrath, WillScot Mobile Mini, M&F and A&O discussed the potential timing for making an HSR filing.

On December 20, 2023, McGrath and WillScot Mobile Mini agreed to proceed with an HSR filing based on the WillScot Mobile Mini LOI with a target filing date of December 22, 2023.

On December 21, 2023, the Chief Executive Officer of Party A had a telephone call with representatives of Goldman Sachs and indicated that, despite positive views on McGrath and its management team, Party A did not believe that it would be able to provide an adequate premium over McGrath’s current share price of approximately $118, which had risen significantly from $99.69 per share on November 27, 2023, the day before they had submitted their proposal, and as a result determined not to move forward with the proposed acquisition of McGrath.

On December 22, 2023, M&F and A&O on behalf of their respective clients made the HSR filing.

On December 22, 2023, a representative of Goldman Sachs reached out to Mr. Boswell requesting to discuss the progress of the transaction. Mr. Boswell returned the phone call and indicated that the financing process and due diligence were progressing as planned. The representative from Goldman Sachs then indicated that the McGrath Board was sensitive to the recent increase in the trading price of McGrath’s Common Stock and would likely require a customary premium in order for McGrath to agree to proceed with the proposed transaction. Mr. Boswell suggested that such discussion take place late in the week of January 1, 2024.

 

54

On December 22, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Representatives of Goldman Sachs summarized the conversations with the Chief Executive Officer of Party A and Mr. Boswell. The M&F representative discussed the status of the reverse due diligence of WillScot Mobile Mini. She also updated the Transaction Committee on the HSR process. The McGrath senior management then discussed certain executive compensation matters that required clarity in light of the potential transaction and the need for such matters to be set forth in the merger agreement, as well as requested approval to engage McGrath’s current independent compensation consultant to advise the Compensation Committee of the Board on such executive compensation matters, including market trends and comparison to McGrath’s peer group, to facilitate the Compensation Committee’s deliberations on such matters. After further discussion, the Transaction Committee approved the engagement of such consultant. The Transaction Committee further instructed McGrath’s senior management not to have any dialogue with WillScot Mobile Mini about executive compensation or post-closing employment matters unless otherwise authorized by the Transaction Committee.

On December 29, 2023, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. The M&F representative discussed the current status of due diligence, regulatory timetable, and negotiation of the merger agreement, including the significant provisions in the draft from M&F, and the recommendation on certain provisions that are unacceptable to McGrath and suggested compromises on other provisions. Representatives of Goldman Sachs discussed premia for the deal based on recent stock prices for McGrath Common Stock. After further discussion, the Transaction Committee authorized M&F to distribute an updated merger agreement to WillScot Mobile Mini. The Transaction Committee discussed strategies to incentivize WillScot Mobile Mini to increase the purchase price.

Later on December 29, 2023, M&F delivered an updated draft of the merger agreement to A&O.

On January 2, 2024, WillScot Mobile Mini’s financial advisor sent to Goldman Sachs WillScot Mobile Mini’s five-year financial projections (the “WillScot Projections”).

On January 4, 2023, Messrs. Shuster and Soultz had a telephone call to discuss the progress of WillScot Mobile Mini’s due diligence, the status of WillScot Mobile Mini’s financing plans and status of the draft merger agreement. Mr. Shuster further discussed the deal consideration, noting that McGrath’s stock price has increased in a meaningful way and the need for alignment of the appropriate deal consideration so parties can move forward. Also on January 4, 2024, representatives of A&O and M&F had a telephone call to discuss various transaction process matters and a preview from A&O regarding certain provisions in the next turn of the draft merger agreement.

On January 5, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. The M&F representative summarized the current status of the proposed transaction, including an update of the negotiation of the merger agreement and the outstanding issues that needed to be negotiated. Representatives of Goldman Sachs provided preliminary financial analyses of the proposed deal consideration in light of the 40% stock consideration being determined by a fixed exchange ratio which included a discussion of premia paid in similarly situated transactions and discussed other considerations relating to the financial terms of the proposed deal. The Transaction Committee discussed the potential synergies to be derived from the proposed transaction and how to increase the deal consideration in light of such synergies. The Transaction Committee discussed next steps McGrath should pursue to incentivize WillScot Mobile Mini to increase its deal consideration. The Transaction Committee discussed a call between Messrs. Shuster and Soultz and what Mr. Shuster should say to Mr. Soultz. After further discussion, the Transaction Committee determined that it was prudent for Mr. Shuster to have a conversation with Mr. Soultz as discussed by the committee.

On January 5, 2024, A&O delivered an updated draft of the merger agreement to M&F.

 

55

On January 5, 2024, Mr. Soultz connected with Mr. Hanna and requested a meeting to catch up and discuss executive team and key personnel issues for transition alignment.

On January 8, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Mr. Hanna provided a summary of his meeting with Mr. Soultz on January 5, 2024. The M&F representative summarized the current status of the proposed transaction, including an update on diligence, the status of the HSR filing and the negotiation of the merger agreement. The M&F representative discussed the significant provisions in the merger agreement recently distributed by A&O that impacted deal certainty, including McGrath’s obligations to cooperate with WillScot Mobile Mini on the acquisition financing, the marketing period requested by WillScot Mobile Mini and the closing delay risk associated with such provisions, the break-up fee proposal, and the absence of a reverse termination fee proposal, provisions relating to non-solicitation of competing proposals and triggers for payment of a break-up fee. The Transaction Committee then discussed next steps McGrath should pursue to incentivize WillScot Mobile Mini to increase its deal consideration. Specifically, the Transaction Committee proposed a further discussion between Messrs. Shuster and Soultz about the deal valuation. Furthermore, in light of various provisions in the merger agreement that were unacceptable to McGrath, the Transaction Committee proposed that Mr. Shuster should preview for Mr. Soultz that a representative of M&F would contact A&O and outline these provisions and that McGrath would not proceed with the proposed transaction if such provisions remained in the merger agreement. After further discussion, the Transaction Committee determined that it was prudent for Mr. Shuster to have a conversation with Mr. Soultz based on the committee’s discussions.

Later on January 8, 2024, a representative from Goldman Sachs called Mr. Boswell to provide an update on the transaction progress and indicated that Mr. Shuster would be contacting Mr. Soultz to discuss certain issues related to the draft merger agreement and the deal consideration, and Mr. Shuster called Mr. Soultz to note that certain key provisions that were included in the January 5, 2024 draft merger agreement from A&O would need to be discussed between the parties as a threshold matter and stated that the details would be communicated directly to A&O by a representative of M&F. Mr. Shuster reiterated that given the strong recent trading of McGrath’s stock, the deal consideration needed to be revisited in order for McGrath to agree to proceed.

On or about January 8, 2024, Mr. Hanna and Mr. Soultz had a telephone call to discuss deal execution timeline, integration and employee matters.

On January 8, 2024, A&O delivered a further updated draft of the merger agreement to M&F with non- substantive changes to the January 5, 2024 draft. Later on January 8, 2024, a representative from M&F contacted a representative of A&O to provide a list of merger agreement provisions to be discussed between the parties and to schedule a time for a call to discuss them.

On January 9, 2024, representatives of A&O and M&F engaged in discussions regarding certain key provisions in A&O’s recent drafts of the merger agreement that were unacceptable to McGrath and potential compromise positions to such provisions.

On January 9, 2024, the FTC contacted McGrath and WillScot Mobile Mini and asked the parties to provide additional information.

From January 9-10, 2024, representatives of A&O and M&F engaged in further negotiations on the merger agreement.

On January 10, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management, a representative of M&F and a representative of Goldman Sachs were also present. The M&F representative summarized the current status of the proposed transaction, including an update of the negotiation of the merger agreement and the discussion the M&F representative had with A&O about the terms in the merger agreement

 

56

that were unacceptable, the implications of such provisions to McGrath and its shareholders, and the required revisions to such provisions. The M&F representative discussed A&O’s responses to McGrath’s positions and general unwillingness to move from their initial positions. After further discussion, the Transaction Committee authorized the M&F representative to communicate with A&O in writing the significant provisions in the draft merger agreement that were unacceptable and attempt to find acceptable resolutions for such provisions. The Transaction Committee noted that McGrath would not proceed with the proposed transaction unless such provisions were amended in a manner satisfactory to McGrath. The Transaction Committee then discussed next steps McGrath should pursue to incentivize WillScot Mobile Mini to increase its deal consideration.

On January 10, 2024, following the Transaction Committee meeting, Mr. Shuster and Mr. Soultz discussed the Transaction Committee’s position to not proceed with the proposed transaction unless certain provisions of the merger agreement were amended, and M&F sent to A&O a list of issues under the most recent draft merger agreement that would have to be resolved in a manner acceptable to McGrath in order for it to proceed forward with the transaction process.

On January 10, 2024, A&O delivered drafts of commitment papers and related documents of proposed institutional banks involved in WillScot Mobile Mini’s anticipated financing of the proposed transaction to M&F (collectively, the “Financing Commitment Papers”).

On or about January 10, 2024, the Chief Executive Officer of Party A contacted representatives of Goldman Sachs and noted that the FTC contacted him to inquire about Party A’s thoughts on the proposed transaction between McGrath and WillScot Mobile Mini. Representatives of Goldman Sachs did not provide any details about the current status of the proposed transaction with WillScot Mobile Mini.

On January 11, 2024, A&O delivered an updated draft of the merger agreement to M&F proposing edits to the agreement to address the issues on the McGrath issue list.

On January 11, 2024 representatives from Goldman Sachs contacted Mr. Boswell to provide an update on the transaction, progress on the merger agreement, and to share their views on customary transaction premia.

On January 12, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. The M&F representative summarized recent engagements with WillScot Mobile Mini and A&O about the proposed transaction, including the status of negotiation of the draft merger agreement, the significant changes in the current draft circulated by A&O and the current timetable for execution of the same, as well as the current status of the HSR filing, and the potential timing of HSR clearance. The representatives of Goldman Sachs summarized the recent conversation with Mr. Boswell, noting they had discussed the deal consideration in light of the substantial rise in the McGrath stock price and McGrath’s concerns about the lack of deal premium with the proposed $116.00 per share consideration and desire for a low double-digit deal premium. The McGrath senior management provided an update on the financial condition of McGrath in the fourth quarter of 2023, the anticipated results that McGrath would report for its fourth quarter 2023 earnings that were better than market expectations and the prospects for the first quarter of 2024. After the presentations, the Transaction Committee discussed the lack of willingness by WillScot Mobile Mini to increase the deal consideration. The Transaction Committee further discussed with the representative of M&F and representatives of Goldman Sachs various strategies to incentivize WillScot Mobile Mini to increase its deal consideration and the appropriate time to have such a discussion. After further discussion, the Transaction Committee determined that in light of the lack of movement on deal consideration and that certain terms in the current draft of the merger agreement continue to be unacceptable to McGrath, both the M&F representative and McGrath senior management should communicate to WillScot Mobile Mini that they would cease the facilitation of due diligence and negotiation of the merger agreement until WillScot Mobile Mini provided a clear indication of willingness to increase the deal consideration as well as progress on the remaining key open points in the merger agreement.

 

57

On January 12, 2024, Mr. Shuster had a telephone call with Mr. Soultz in which Mr. Shuster communicated to Mr. Soultz that, in light of the lack of movement in the deal consideration, McGrath was ceasing negotiation of the merger agreement and facilitation of due diligence. On the same day, M&F communicated the same message to A&O by email including a list of the remaining provisions of the merger agreement which needed to be resolved prior to McGrath’s re-engagement with WillScot Mobile Mini.

On January 14, 2024, representatives of Goldman Sachs called Mr. Boswell to discuss a path forward on valuation and certain key merger agreement terms.

On January 14, 2024, Messrs. Shuster and Soultz had a telephone call, at which time Mr. Soultz communicated to Mr. Shuster that a revised offer was forthcoming. Thereafter, McGrath received a revised written non-binding offer providing for a per share price of $121.00, with 40% stock consideration (the “January 14, 2024 WillScot Offer”). The offer noted that the increase of per share price to $121.00 was conditioned on McGrath’s acceptance of various matters as stated in the January 14, 2024 WillScot Offer, including McGrath being responsive to information requests from the FTC and agreeing to “pull and refile” the parties’ respective HSR filings, the reinstatement of all work streams associated with the proposed transaction, including re-engagement on legal due diligence and negotiation of the merger agreement, McGrath’s obligations to cooperate with WillScot Mobile Mini on its acquisition financing, a break-up fee of 3.5%, a reverse termination fee of 6%, and certain deal protection provisions and closing conditions.

On January 15, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Mr. Shuster summarized his conversation with Mr. Soultz on January 12, 2024, including the desire for a higher valuation and further concessions by WillScot Mobile Mini regarding the draft merger agreement. Representatives of Goldman Sachs then summarized the financial terms of the January 14, 2024 WillScot Offer, including the increase of the deal consideration to $121.00 per share. The M&F representative then summarized WillScot Mobile Mini’s conditions for the increased deal consideration. The M&F representative then discussed the legal significance of WillScot Mobile Mini’s conditions and the current status of the HSR filing, including the timing of potential HSR clearance. After further discussion, the Transaction Committee instructed representatives of Goldman Sachs to have a conversation with Mr. Boswell to note that McGrath was willing to re-engage on the proposed transaction if WillScot Mobile Mini increased its deal consideration to $123.00 per share. Subject to the increased deal consideration, the Transaction Committee authorized M&F to re-engage with A&O on the draft merger agreement, cooperate with WillScot Mobile Mini on a “pull and refile” strategy and respond to FTC information requests. The Transaction Committee then discussed a strategy to inquire whether Party A would be willing to match or exceed a deal consideration of $123.00 per share. The Transaction Committee adjourned the meeting to reconvene later in the day so the representatives of Goldman Sachs could report on their discussion with Mr. Boswell.

Later on January 15, 2024, representatives of Goldman Sachs had a telephone conversation with Mr. Boswell as directed by the Transaction Committee.

Later on January 15, 2024, Mr. Soultz communicated via email to Mr. Shuster that WillScot Mobile Mini was willing to increase the price per share to $123.00, with 40% stock consideration, provided that the conditions outlined in the January 14, 2024 WillScot Offer, as well as additional specified conditions, including a break-up fee of 5% and McGrath’s obligations to cooperate with WillScot Mobile Mini on its acquisition financing, were accepted by McGrath.

At the reconvened Transaction Committee meeting on January 15, 2024, the representatives of Goldman Sachs summarized the call with Mr. Boswell. The M&F representative then summarized WillScot Mobile Mini’s additional conditions for the increased deal consideration of $123.00 per share and discussed the legal significance of such additional conditions. After further discussion, the Transaction Committee agreed to defer further negotiation of the break-up fee proposal but in light of WillScot Mobile Mini’s movement on the deal

 

58

consideration was willing to re-engage on the negotiation of the draft merger agreement and agree to the “pull and refile” HSR strategy.

On January 16, 2024, pursuant to a request from the Transaction Committee to re-confirm Party A’s interest, representatives of Goldman Sachs had a telephone call with Party A, wherein Party A reiterated that they were not able to increase their offer above $120.00.

On January 16, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management, a representative of M&F, and a representative of Goldman Sachs were also present. The representative of Goldman Sachs summarized the discussion with Party A and the further conversation with Mr. Boswell whereby Mr. Boswell further explained WillScot Mobile Mini’s rationale for increasing the break-up fee to 5%. At the Transaction Committee’s request M&F provided its views from a legal perspective on the 5% break-up fee proposal and its analysis of market trends for break-up fees. The M&F representative then discussed the McGrath Board’s fiduciary duty considerations in relation to the break-up fee proposal and the potential impact of the increased break-up fee. The M&F representative discussed with the Transaction Committee a negotiation strategy to lower the break-up fee proposal and the appropriate time to raise the issue.

On January 16, 2024, following the Transaction Committee meeting, M&F sent an updated draft of the merger agreement to A&O.

On January 17, 2024, a representative of A&O communicated to a representative of M&F that M&F’s January 16, 2024 draft merger agreement was unacceptable to WillScot Mobile Mini, indicating that, other than the business and legal points agreed upon over the weekend of January 15-17, WillScot Mobile Mini was not willing to deviate from A&O’s January 11, 2024 draft of the merger agreement.

On January 18, 2024, A&O delivered an updated draft of the merger agreement to M&F, reflecting changes to its January 11, 2024 draft only to reflect the business and legal points that had been agreed to on January 15-17.

Between January 19-21, 2024, representatives from WillScot Mobile Mini and McGrath, and their respective attorneys, held zoom meetings to discuss the key provisions of the draft merger agreement, including the break-up fee amount, the termination fee triggers, non-solicitation obligations of McGrath, cooperation obligations among the parties on HSR matters, McGrath’s obligations to cooperate on acquisition financing and timing of the closing in relation to the acquisition financing, closing conditions and certain interim operating covenants. Pursuant to the meetings, the closing conditions, the termination triggers, the triggers for payment of break-up fees and non-solicitation restrictions were largely agreed upon.

On January 21, 2024, A&O delivered a further updated draft of the merger agreement to M&F. On January 21, 2024, representatives from Goldman Sachs and Mr. Boswell discussed the status of WillScot Mobile Mini’s financing of the proposed transaction and the mechanism for determination of the exchange ratio for the WillScot Mobile Mini common stock to be received by McGrath shareholders. The discussions revealed disagreement on the mechanism for the determination of the exchange ratio, with WillScot Mobile Mini proposing that the exchange ratio be determined based on the VWAP of WillScot Mobile Mini common stock over the 30 consecutive trading days prior to the signing of the merger agreement, and McGrath proposing a determination based on the number of trading days within the 30 consecutive calendar days prior to the signing of the merger agreement.

Between January 21-22, 2024, Messrs. Hanna and Soultz had in-person meetings to discuss various aspects of the proposed transaction and draft merger agreement, including interim operating covenants, cooperation among the parties on HSR matters, retention mechanisms for McGrath employees during the period between signing and closing and certain representations and warranties in the merger agreement.

On January 22, 2024, senior management from McGrath and WillScot Mobile Mini, together with representatives from M&F and A&O, held a zoom meeting to discuss WillScot Mobile Mini’s financing

 

59

approach and the financing provisions in the draft merger agreement. Based on the meeting and subsequent follow-ups, WillScot Mobile Mini agreed to delete the marketing period provision for the acquisition financing and McGrath agreed to certain obligations to cooperate with WillScot Mobile Mini on its acquisition financing.

On January 22, 2024, WillScot Mobile Mini and McGrath pulled and refiled their respective HSR filings.

On January 22, 2024, the Compensation Committee of the McGrath Board held a meeting to discuss the treatment of equity compensation awards in the proposed transaction. Senior management from McGrath were also present. McGrath’s senior management updated the committee on the remaining open issues in the merger agreement related to the treatment of company-issued 2022 PSU Awards and the upcoming 2024 annual equity award grants. The committee reviewed and discussed the treatment of company- issued equity awards in the event of change in control or corporate transaction, as set forth in the McGrath 2016 Stock Incentive Plan and applicable award agreements. The committee further reviewed McGrath’s projections on the achievement of performance targets for the 2022 PSU Awards. After review, discussion and consideration, the committee approved the full acceleration and vesting, at actual anticipated performance, of the 2022 PSU Awards at or immediately before the closing of the transaction. The Committee further authorized management to issue all 2024 employee equity awards previously approved at the committee’s December 2023 meeting in the form of RSUs.

On January 22, 2024, M&F received updated drafts of the Financing Commitment Papers. Between January 22 and January 26, 2024, M&F and A&O negotiated the Financing Commitment Papers.

On January 23, 2024, Mr. Pratt and representatives of Goldman Sachs held a meeting with Mr. Boswell to discuss the WillScot Projections previously provided by WillScot Mobile Mini, including the underlying assumptions and rationale.

On January 23, 2024, the Transaction Committee held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Representatives of Goldman Sachs summarized the telephone call with Party A’s Chief Executive Officer on January 16, 2024, whereby Party A’s Chief Executive Officer reiterated that Party A was not able to increase its offer above $120.00 per share. In view of the knowledge of the Transaction Committee of the industry in which McGrath operates as well as potential parties that would be interested in an acquisition of McGrath and taking into account the prior discussions with Party A and after discussion with representatives of Goldman Sachs and a representative of M&F, the Transaction Committee confirmed that WillScot Mobile Mini was the party best positioned to offer a business combination on the most favorable terms to McGrath shareholders and that seeking other indications of interest was not likely to result in a better transaction and could put the proposed transaction with WillScot Mobile Mini at risk because of, among other things, the associated delays and the potential that information regarding the proposed transaction could be leaked. Furthermore, the Transaction Committee considered the terms of the merger agreement related to McGrath’s ability to respond to unsolicited acquisition proposals and the amount of the break-up fee and determined that third parties would be unlikely to be deterred from making a competing proposal by the provisions of the merger agreement. At the same meeting, the M&F representative summarized the significant terms in the draft merger agreement, the significance of such terms on deal certainty, and the Board’s ability to pursue a superior proposal, as well as the agreement on financing mechanism for WillScot Mobile Mini and McGrath’s obligations to cooperate on the acquisition financing. The M&F representative then discussed the negotiation of the break-up fee amount, with McGrath’s proposal at 4% and WillScot Mobile Mini’s proposal at 5%. The M&F representative further discussed a strategy to negotiate a reduction in the break-up fee as the parties move closer to finalization of the merger agreement. The M&F representative provided an update on the due diligence process with WillScot Mobile Mini, as well as the reverse due diligence of WillScot Mobile Mini. Representatives of Goldman Sachs discussed the difference of opinion on the mechanism for determination of the exchange ratio for the WillScot Mobile Mini common stock to be received by McGrath shareholders and the economic impact of such difference.

 

60

On January 23, 2024, M&F delivered an updated draft of the merger agreement to A&O based on discussions during the prior week. On the same day, M&F also delivered McGrath’s draft disclosure schedules associated with its representations and warranties in the merger agreement (the “Company Disclosure Schedules”) to A&O.

On January 24, 2024, A&O delivered an updated draft of the merger agreement to M&F.

On January 25, 2024, Messrs. Shuster and Soultz had a telephone call to discuss the amount of the termination fee proposed in the draft merger agreement. Mr. Shuster requested the break-up fee be 4%, whereas Mr. Soultz insisted on 5%. Mr. Shuster and Mr. Soultz discussed a potential compromise to adjust the termination fee, valuation and exchange ratio accordingly.

On January 25, 2024, M&F delivered updated drafts of the merger agreement and the Company Disclosure Schedules to A&O. On the same day, A&O delivered WillScot Mobile Mini’s draft disclosure schedules associated with its representations and warranties in the merger agreement to M&F. Also on January 25, 2024, representatives of WillScot Mobile Mini and McGrath had diligence calls.

On January 25, 2024, the McGrath Board held a meeting, with all directors in attendance and with McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs also present, to review the proposed acquisition of McGrath by WillScot Mobile Mini on the terms set forth in the draft merger agreement. The M&F representative provided an overview of the McGrath Board’s fiduciary duties under California law and reviewed the material terms of the draft merger agreement, including the deal structure, determination of the exchange ratio, deal protection provisions for McGrath that included no financing contingency, the right under certain circumstances to terminate the merger agreement to pursue a superior proposal, the right of the McGrath Board to change its recommendation to shareholders in the event of certain intervening events, reverse termination fee and a material adverse effect closing condition in relation to WillScot Mobile Mini. Specifically, the McGrath Board considered the terms of the merger agreement related to McGrath’s ability to respond to unsolicited acquisition proposals and the amount of the break-up fee and determined that third parties would be unlikely to be deterred from making a competing proposal by the provisions of the merger agreement. The M&F Representative further discussed the termination triggers, the end date, antitrust cooperation and the acquisition financing details. Further, the M&F representative discussed the deal protection provisions for WillScot Mobile Mini, including McGrath’s non-solicitation obligations, the break-up fee and triggers for the same. In addition, the M&F representative summarized the resolution of certain key issues under the merger agreement. Then the M&F representative noted the few discrete points that remained outstanding in the merger agreement, including the exchange ratio and the break-up fee amount payable by McGrath. McGrath’s senior management discussed McGrath’s revised financial projections of the company on a standalone basis updated through 2028. After further discussion, the McGrath Board approved the updated projections and authorized the use of such updated projections for Goldman Sachs’ financial analyses. Representatives of Goldman Sachs reviewed its preliminary financial analyses with respect to the transaction, based on the forecasts. Thereafter, the McGrath Board discussed the Transaction Committee’s strategies implemented to maximize shareholder value, including previously gauging the interests of Party A and the extended negotiation of the deal terms and merger agreement provisions. The McGrath Board then instructed its advisors to further negotiate and finalize the outstanding matters in the merger agreement over the course of the next several days with a view to execute the merger agreement on January 28, 2024, and announce publicly the proposed transaction before the Nasdaq market opened on January 29, 2024. At the same meeting, the McGrath Board approved the issuance of annual restricted stock unit awards to certain McGrath officers and the McGrath non- employee directors that are historically granted annually around such time.

On January 26, 2024, A&O delivered an updated draft of the merger agreement to M&F. On the same day, M&F delivered a further updated draft of the merger agreement to A&O, along with the updated Company Disclosure Schedules. M&F’s January 26, 2024 draft of the merger agreement provided that the break-up fee would be 4.0% of the proposed equity value of the proposed transaction.

 

61

On January 27, 2024, A&O provided to M&F a draft of the merger agreement with comments from counsel for WillScot Mobile Mini’s acquisition financing sources. On the same day, A&O delivered a further updated draft of the merger agreement following A&O’s discussions with counsel for WillScot Mobile Mini’s acquisition financing sources. On the same day, M&F delivered a further updated draft of the Company Disclosure Schedules to A&O.

On January 27, 2024, M&F received finalized drafts of the Financing Commitment Papers.

On January 27, 2024, the McGrath Board held a meeting, at which McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Messrs. Shuster and Hanna and the representative of M&F and representatives of Goldman Sachs provided an update of the current status of the proposed transaction, including the outstanding issues remaining in the merger agreement and the approach to resolving such issues, as well as the potential timetable for execution of the merger agreement.

Between January 27-28, 2024, Messrs. Shuster and Soultz exchanged communications regarding the appropriate time period for determination of the exchange ratio. Mr. Shuster continued to propose the use of VWAP over the trading days within the trailing 30 consecutive calendar days, resulting in an exchange ratio of 1.1353, whereas Mr. Soultz continued to propose a VWAP over the trailing 30 consecutive trading days, resulting in an exchange ratio of 1.1216, in both cases assuming a signing of the merger agreement on January 28, 2024.

On January 28, 2024, Messrs. Shuster and Soultz had a telephone call to discuss the outstanding issue relating to the exchange ratio. After further discussion, the parties agreed to a compromise and resolved the exchange ratio to be 1.1284.

On January 28, 2024, the McGrath Board held a meeting, at which all directors were in attendance and McGrath’s senior management and a representative of M&F and representatives of Goldman Sachs were also present. Messrs. Shuster and Hanna and the representative of M&F and representatives of Goldman Sachs provided an update on negotiations with WillScot Mobile Mini, noting that the exchange ratio issue discussed at the January 25 and 27 meetings of the McGrath Board had been resolved via compromise at 1.1284 and that there were no outstanding issues relating to the merger agreement. Representatives of Goldman Sachs reviewed and discussed its updated financial analyses with respect to the transaction. Thereafter, at the request of the McGrath Board, representatives of Goldman Sachs orally rendered its opinion, subsequently confirmed in writing to the McGrath Board that, as of January 28, 2024, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to the holders (other than WillScot Mobile Mini and its affiliates) of shares of McGrath common stock pursuant to the merger agreement was fair from a financial point of view to such holders. For a detailed discussion of the opinion provided by Goldman Sachs, please see “The Merger — Opinion of McGrath’s Financial Advisor.” Representatives of Goldman Sachs also verbally confirmed that there were no material changes to the relationship disclosure previously provided to the McGrath Board. The McGrath Board discussed the merger agreement and, after taking into consideration Goldman Sachs’ fairness opinion, the discussions with their financial and legal advisors, and members of McGrath’s senior management, and taking into account the factors described below under “McGrath Board’s Recommendation and Reasons for the Transaction,” the McGrath Board determined that it was fair to, and in the best interests of, McGrath and its shareholders to proceed with the proposed transaction pursuant to the terms set forth in the merger agreement. Accordingly, the McGrath Board unanimously authorized, approved, and declared advisable the transaction, upon the terms and subject to the conditions set forth in the merger agreement. The McGrath Board also directed that the proposed merger agreement be submitted to the McGrath shareholders for consideration and recommended that the McGrath shareholders adopt the merger agreement.

On January 28, 2024, M&F delivered to A&O an execution version of the Merger Agreement. Thereafter, M&F received evidence of execution of the Financing Commitment Papers. Subsequently, the Merger Agreement was executed on the same day by McGrath and WillScot Mobile Mini.

 

62

McGrath and WillScot Mobile Mini issued a joint press release announcing the Transaction before the Nasdaq market opened on the morning of January 29, 2024. McGrath filed a Current Report on Form 8-K announcing the transaction and attaching the joint press release before the Nasdaq market opened on January 29, 2024 (the “Announcement 8-K”). After the Nasdaq market closed on January 29, 2024, McGrath filed an amendment to the originally filed Announcement 8-K and attached the Merger Agreement as an exhibit.

McGrath Board’s Recommendation and Reasons for the Transaction

By unanimous vote, the McGrath Board, at a special meeting held virtually on January 28, 2024: (i) determined that the Merger Agreement and the Transaction, are advisable, fair to and in the best interests of McGrath and the McGrath shareholders, (ii) approved, adopted and declared advisable the Merger Agreement and the Transaction, (iii) directed that the approval and adoption of the Merger Agreement and the Transaction, be submitted to a vote at a meeting of the McGrath shareholders and (iv) resolved, subject to the terms and conditions of the Merger Agreement, to recommend adoption and approval of the Merger Agreement and Transaction, by the McGrath shareholders. The McGrath Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Merger-Related Compensation Proposal, and “FOR” the Adjournment Proposal.

The below discussion of the information and factors considered by the McGrath Board is not exhaustive. In view of the McGrath Board’s consideration of a wide variety of factors in connection with its evaluation of the Merger Agreement and the Transaction, and the complexity of these matters, the McGrath Board did not consider it practical to, nor did it attempt to, quantify, rank, or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Moreover, each member of the McGrath Board applied his or her own personal business judgment to the process and may have given different weight to different factors. The McGrath Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The McGrath Board based its recommendation on the totality of the information available to it, including discussions with McGrath’s management team, and representatives of Goldman Sachs and M&F. The McGrath Board considered all of factors set forth below as a whole, as well as others, and, on balance, concluded that the potential benefits of the Transaction to the McGrath shareholders outweighed the risks, uncertainties, restrictions, and potentially negative factors associated with the Transaction.

The actual benefits from the Transaction could be different from the foregoing estimates and those differences could be material. Accordingly, there can be no assurance that any of the potential benefits described below or included in the factors considered by the McGrath Board will be realized. See “Risk Factors” beginning on page 26.

The below discussion of the information and factors considered by the McGrath Board is forward-looking in nature and should be read in light of the factors described in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 24.

Strategic and Financial Considerations.

 

•

McGrath shareholders will receive for each of their shares of McGrath Common Stock either $123.00 in cash or 2.8211 shares of WillScot Mobile Mini Common Stock, as determined pursuant to the election and allocation procedures in the Merger Agreement under which 60% of McGrath’s outstanding shares will be converted into the cash consideration and 40% of McGrath’s outstanding shares will be converted into the stock consideration.

 

•

The transaction values McGrath at an enterprise value of $3.8 billion and the per-share consideration represents a premium of 10.1% to McGrath’s closing stock price on January 26, 2024.

 

63

•

There are risks and uncertainties in executing McGrath’s strategic plans and achieving McGrath’s standalone financial projections, including the risks and uncertainties described in the “risk factors” set forth in McGrath’s Annual Report on Form 10-K for the year ended December 31, 2023, whereas the Merger Consideration provides the McGrath shareholders with either a fixed cash amount that provides certainty of value and liquidity or the opportunity to participate in a larger, more diversified company.

 

•

The Exchange Ratio for the stock portion of the Merger Consideration represents a fixed number of shares of WillScot Mobile Mini Common Stock for each share of McGrath Common Stock, which affords the McGrath shareholders the opportunity to benefit from any increase in the trading price of WillScot Mobile Mini Common Stock following the announcement of the Transaction.

 

•

The fact that the McGrath Board considered other possible acquirors and determined that Party A was the most viable and notwithstanding multiple outreaches to Party A, it declined to move forward with a transaction above $120 per share, as described in the section entitled “— Background of the Transaction” beginning on page 39.

 

•

The McGrath Board considered the terms of the Merger Agreement related to McGrath’s ability to respond to unsolicited acquisition proposals and the amount of the termination fee and determined that third parties would be unlikely to be deterred from making an Acquisition Proposal by the provisions of the Merger Agreement.

 

•

The fact that the Merger Consideration reflected extended arm’s length negotiations between McGrath and WillScot Mobile Mini and their respective advisors.

 

•

The McGrath Board considered WillScot Mobile Mini’s five-year financial projections and pro forma combined company projections, as well as other information with respect to WillScot Mobile Mini’s financial condition, results of operations, business, competitive position and business prospects and risks, both on a historical and prospective basis, as well as current industry, economic and market conditions and trends, and discussed such matters with McGrath’s management team, representatives of Goldman Sachs and a representative of M&F.

 

•

The strength of the management team following the Transaction.

 

•

The belief that the complementary geographic footprint and customer base of the combined company would mitigate seasonal and economic volatility and in light of the stock component, the McGrath shareholders would benefit from the strength of the combined company.

 

•

The understanding from WillScot Mobile Mini that the Transaction would accelerate the growth of the combined company, and in light of the stock component, McGrath shareholders would benefit from the upside potential of the combined company.

 

•

The understanding from WillScot Mobile Mini that it projected a $50 million of cost synergies in connection with the Transaction.

 

•

The McGrath shareholders would benefit from a tax-free reorganization under IRC Section 368 for the stock portion of the Merger Consideration.

 

•

Terms of the Merger Agreement. The McGrath Board, with the assistance of legal advisors, reviewed the terms of the Merger Agreement, including:

 

•

The ability of the McGrath Board, subject to specified limitations, prior to the McGrath Shareholder Approval being obtained, to respond to and engage in discussions or negotiations regarding unsolicited Acquisition Proposals if the McGrath Board determines in good faith after consultation with McGrath’s outside legal counsel and financial advisor that the failure to take such action would be inconsistent with its fiduciary duties to the McGrath shareholders under applicable law.

 

•

The fact that the McGrath Board has the right, prior to the McGrath Shareholder Approval being obtained, to change its recommendation to the McGrath shareholders that they vote in favor of the

 

64

Merger Proposal if the McGrath Board determines in good faith after consultation with McGrath’s outside legal counsel and financial advisor that, as a result of an Intervening Event, the failure to change its recommendation would be inconsistent with its fiduciary duties to the McGrath shareholders under applicable law.

 

•

McGrath’s right, prior to the McGrath Shareholder Approval being obtained, under certain circumstances to terminate the Merger Agreement, in order to enter into a definitive agreement with respect to a Superior Proposal, subject to providing WillScot Mobile Mini an opportunity to match such proposal prior to taking such action, and payment to WillScot Mobile Mini of a termination fee of $120 million if the Merger Agreement is so terminated, which amount the McGrath Board believes to be reasonable.

 

•

McGrath’s obligation to consummate the transaction is conditioned on there having been no material adverse effect (subject to exceptions set forth in the Merger Agreement) on the financial condition, business, assets, liabilities or results of operations of WillScot Mobile Mini between the execution of the Merger Agreement and the closing of the Transaction.

 

•

WillScot Mobile Mini is required under the Merger Agreement to take all actions necessary to obtain antitrust approvals, except for actions that would have a material adverse effect on WillScot Mobile Mini and its subsidiaries or McGrath and its subsidiaries.

 

•

Assuming all other closing conditions are satisfied (or waived), including McGrath Shareholder Approval of the Transaction, McGrath’s right to receive a termination fee of $180 million from WillScot Mobile Mini in the event the Merger Agreement is terminated under certain circumstances related to the failure to obtain antitrust approvals.

 

•

WillScot Mobile Mini is required under the Merger Agreement to retain all McGrath employees until the later of the end of the 2024 calendar year or 6 months after closing, and if there is a termination without cause after that period and before the 12-month anniversary of consummation of the Transaction, employees will receive 90 days’ notice.

 

•

The fact that McGrath is able to operate in accordance with its 2024 business plan during the period prior to the completion of the Transaction or the termination of the Merger Agreement.

 

•

The fact that, on the corollary, WillScot Mobile Mini is subject to specified restrictions during the period prior to the completion of the Transaction or the termination of the Merger Agreement.

 

•

The fact that the representations and warranties of each of McGrath and WillScot Mobile Mini are reasonable under the circumstances.

 

•

The fact that the McGrath shareholders will have the opportunity to vote to approve or reject the Merger Proposal at the Special Meeting.

 

•

Regulatory Matters. The McGrath Board considered the regulatory clearances that would be required as a condition to the Transaction and the prospects and anticipated timing of obtaining those clearances.

 

•

Opinion of Financial Advisor. The McGrath Board considered the oral opinion of Goldman Sachs rendered to the McGrath Board, which was subsequently confirmed by delivery of a written opinion dated January 28, 2024, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Goldman Sachs in preparing its opinion, the Merger Consideration to be paid to the McGrath shareholders (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under “The Merger — Opinion of McGrath’s Financial Advisor” beginning on page 67.

 

65

The McGrath Board also considered a number of potentially negative factors in its deliberations concerning the Merger Agreement and the transactions contemplated thereby, including:

 

•

Following the Transaction, McGrath shareholders will not have the opportunity to realize the potential long-term value of the successful execution of McGrath’s current strategy as an independent company.

 

•

The possibility that the Transaction might not be completed on a timely basis or in the timeline laid out in the Merger Agreement, or at all, as a result of delays in or the failure to receive the required regulatory clearances or satisfy other closing conditions, which could divert McGrath management attention and resources from the operation of McGrath’s business and increase expenses from an unsuccessful attempt to complete the Transaction.

 

•

The costs to be incurred in connection with the Transaction, regardless of whether it is completed and the risks and contingencies relating to the announcement and pendency of the Transaction and the risks and costs to McGrath if the Transaction is not completed on a timely basis or at all.

 

•

The uncertainty about the effect of the Transaction, regardless of whether it is completed, on McGrath’s employees, customers and other parties, which may impair McGrath’s ability to attract, retain and motivate key personnel, and could cause customers, suppliers and others to seek to change existing business relationships with McGrath.

 

•

The Exchange Ratio represents a fixed number of shares of WillScot Mobile Mini Common Stock, which means the market value of the WillScot Mobile Mini Common Stock received by the McGrath shareholders at the completion of the Transaction may differ, possibly materially, from the market value of the WillScot Mobile Mini Common Stock at the time the Merger Agreement was entered into or at any other time, including the possibility that such value could become lower if the trading prices of WillScot Mobile Mini Common Stock declines between the announcement and completion of the Transaction.

 

•

The risk that subject to exceptions set forth in the Merger Agreement, certain material adverse effects on the financial condition, business, assets, liabilities or results of operations of McGrath or WillScot Mobile Mini could result in a failure to complete the Transaction.

 

•

The potential difficulties of integrating the business of WillScot Mobile Mini and McGrath and the risk that all or some portion of the potential benefits of the Transaction (including the anticipated cost synergies) might not be realized or might take longer to realize than expected.

 

•

The fact that, under the terms of the Merger Agreement, prior to the completion of the Transaction or termination of the Merger Agreement, subject to certain exceptions, McGrath is required to conduct its business only in the ordinary course, and is subject to specified restrictions on its ability to conduct its business, including in respect of entering into or terminating material contracts, settling litigation or increasing the compensation of its employees.

 

•

McGrath’s inability to solicit competing acquisition proposals and the possibility that the termination fee payable by McGrath to WillScot Mobile Mini upon termination by McGrath of the Merger Agreement in order to accept a Superior Proposal could discourage other potential acquirers from making a competing offer to purchase McGrath.

 

•

The risk of significant selling pressure on the price of WillScot Mobile Mini Common Stock following the closing of the Transaction if a significant number of McGrath shareholders seek to sell the WillScot Mobile Mini Common Stock they receive as Merger Consideration.

 

•

The potential for litigation relating to the Merger Agreement and the Transaction, and the associated costs, distraction and inconvenience involved in defending those proceedings.

In considering the recommendation of the McGrath Board to adopt the Merger Agreement, the McGrath shareholders should be aware that the directors of McGrath have certain interests in the Transaction that may be different from, or in addition to, the interests of McGrath shareholders generally, as more fully described below

 

66

under the section captioned “— Interests of McGrath Directors and Executive Officers in the Merger.” The McGrath Board was aware of these interests and considered them when adopting the Merger Agreement and recommending that McGrath shareholders vote in favor of the Merger Proposal.

Opinion of McGrath’s Financial Advisor

Introduction

Goldman Sachs rendered its oral opinion, subsequently confirmed in writing, to the McGrath Board that, as of January 28, 2024 and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the holders (other than WillScot Mobile Mini and its affiliates) of shares of McGrath Common Stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated January 28, 2024, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. The summary of Goldman Sachs’ opinion contained in this proxy statement/ prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs provided advisory services and its opinion for the information and assistance of the McGrath Board in connection with its consideration of the Transaction. Goldman Sachs’ opinion is not a recommendation as to how any holder of McGrath Common Stock should vote or make any election with respect to the Transaction or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the Merger Agreement;

 

•

annual reports to stockholders and Annual Reports on Form 10-K of McGrath and WillScot Mobile Mini for the five fiscal years ended December 31, 2022;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of McGrath and WillScot Mobile Mini;

 

•

certain other communications from McGrath and WillScot Mobile Mini to their respective stockholders;

 

•

certain publicly available research analyst reports for McGrath and WillScot Mobile Mini;

 

•

certain internal financial analyses and forecasts for WillScot Mobile Mini standalone as prepared by its management; and

 

•

certain internal financial analyses and forecasts for McGrath, and certain financial analyses and forecasts for WillScot Mobile Mini pro forma for the Transaction, in each case, as prepared by the management of McGrath and as approved for Goldman Sachs’ use by McGrath (referred to in this section as the “McGrath Forecasts” and which are summarized in the section entitled “— Certain Unaudited Prospective Financial Information” beginning on page 74), including certain operating synergies projected by the management of WillScot Mobile Mini to result from the Transaction, as approved for Goldman Sachs’ use by McGrath (referred to in this section as the “Synergy Projections”).

Goldman Sachs also held discussions with members of the senior managements of McGrath and WillScot Mobile Mini regarding their assessment of the strategic rationale for, and the potential benefits of, the Transaction and the past and current business operations, financial condition and future prospects of McGrath and WillScot Mobile Mini; reviewed the reported price and trading activity for McGrath Common Stock and WillScot Mobile Mini Common Stock; compared certain financial and stock market information for McGrath and WillScot Mobile Mini with similar information for certain other companies the securities of which are

 

67

publicly traded; reviewed the financial terms of certain recent business combinations in the mobile modular industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the McGrath Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the McGrath Board directors that the McGrath Forecasts, including the Synergy Projections, were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of McGrath. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of McGrath or WillScot Mobile Mini or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on McGrath or WillScot Mobile Mini or on the expected benefits of the Transaction in any way meaningful to its analysis. Goldman Sachs also assumed that the Transaction will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of McGrath to engage in the Transaction or the relative merits of the Transaction as compared to any strategic alternatives that may be available to McGrath; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, to the holders (other than WillScot Mobile Mini and its affiliates) of shares of McGrath Common Stock of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Transaction or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Transaction, including any allocation of the Merger Consideration, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of McGrath; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of McGrath, or class of such persons, in connection with the Transaction, whether relative to the Merger Consideration to be paid to the holders (other than WillScot Mobile Mini and its affiliates) of shares of McGrath Common Stock pursuant to the Merger Agreement or otherwise. Goldman Sachs does not express any opinion as to the prices at which shares of McGrath Common Stock or WillScot Mobile Mini Common Stock will trade at any time, or as to the potential effects of volatility in the credit, financial and stock markets on McGrath, WillScot Mobile Mini or the Transaction, or as to the impact of the Transaction on the solvency or viability of McGrath or WillScot Mobile Mini or the ability of McGrath or WillScot Mobile Mini to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the McGrath Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial

 

68

analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 26, 2024, the last trading day before the public announcement of the Transaction, and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis

For the purpose of this analysis, Goldman Sachs calculated an implied value of the Merger Consideration, assuming proration of 60% cash and 40% stock consideration pursuant to the Merger Agreement, of $124.72 per share of McGrath Common Stock by adding (i) the cash consideration of $73.80 (accounting for proration) to (ii) an implied value of the stock consideration of $50.92, calculated by multiplying the exchange ratio of 1.1284 (accounting for proration) by the closing per share price of WillScot Mobile Mini Common Stock as of January 26, 2024, the last completed trading day prior to announcement of the Transaction. Goldman Sachs then analyzed the implied value of the Merger Consideration in relation to certain prices of McGrath Common Stock during such period.

The analysis indicated that the implied Merger Consideration of $124.72 represented:

 

•

a premium of 11.6% based on the closing price per share of McGrath Common Stock as of January 26, 2024 of $111.75;

 

•

a premium of 10.0% based on the volume weighted average price of McGrath for the 30-calendar day period ended January 26, 2024 of $113.42;

 

•

a premium of 3.9% based on the highest closing price per share of McGrath Common Stock for the 52- week period ended January 26, 2024 of $119.99.

Illustrative Discounted Cash Flow Analysis — McGrath Standalone

Using the McGrath Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on McGrath to derive a range of illustrative present values per share of McGrath Common Stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 8.0% to 9.0%, reflecting estimates of McGrath’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2023 (i) estimates of unlevered free cash flow for McGrath for the calendar years 2024 through 2028 as reflected in the McGrath Forecasts and (ii) a range of illustrative terminal values for McGrath, which were calculated by applying a range of terminal year exit enterprise value (“EV”) to earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples of 8.0x to 9.5x to an estimate of the EBITDA to be generated by McGrath in the calendar year 2028, as reflected in the McGrath Forecasts (which analysis implied perpetuity growth rates of an estimated terminal year unlevered free cash flow ranging from 4.1% to 5.6%). The range of terminal year exit EV/EBITDA multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account McGrath’s historical EV/last twelve month (“LTM”) EBITDA multiples. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model (“CAPM”), which requires certain company-specific inputs, including McGrath’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for McGrath, as well as certain financial metrics for the United States financial markets generally.

Goldman Sachs derived a range of illustrative EVs for McGrath by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative EVs it derived for McGrath the amount of McGrath’s net debt as of December 31, 2023 as provided by and approved for Goldman Sachs’ use by the management of McGrath, to derive a range of illustrative equity values for McGrath. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of McGrath as of December 31, 2023, as provided by and approved for Goldman Sachs’ use by the management of McGrath, using the treasury stock method, to derive a range of illustrative present values per share ranging from $100 to $127, rounded to the nearest dollar.

 

69

Illustrative Discounted Cash Flow Analysis — Pro Forma Combined Company

Using the McGrath Forecasts, including the Synergy Projections, Goldman Sachs performed an illustrative discounted cash flow analysis on the pro forma combined company. Using the mid-year convention for discounting cash flows and discount rates ranging from 9.0% to 10.5%, reflecting estimates of the pro forma combined company’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2023 (i) estimates of unlevered free cash flow for the pro forma combined company for the calendar years 2024 through 2028 as reflected in the McGrath Forecasts and (ii) a range of illustrative terminal values for the pro forma combined company, which were calculated by applying a range of terminal year exit EV to EBITDA multiples of 9.0x to 10.5x to an estimate of the EBITDA to be generated by the pro forma combined company in the calendar year 2028, as reflected in the McGrath Forecasts (which analysis implied perpetuity growth rates of an estimated terminal year unlevered free cash flow ranging from 4.1% to 6.2%). The range of terminal year exit EV/EBITDA multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the McGrath Forecasts, including the Synergy Projections, and the historical EV/LTM EBITDA multiples for each of McGrath and WillScot Mobile Mini. Goldman Sachs derived such discount rates by application of the CAPM, which requires certain company-specific inputs, including the pro forma combined company’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the pro forma combined company, as well as certain financial metrics for the United States financial markets generally.

Goldman Sachs derived a range of illustrative EVs for the pro forma combined company by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative EVs it derived for the pro forma combined company the amount of the pro forma combined company’s net debt as of December 31, 2023 as provided by and approved for Goldman Sachs’ use by the management of McGrath, to derive a range of illustrative pro forma equity values for the pro forma combined company. Goldman Sachs then divided the range of illustrative pro forma equity values it derived by the number of fully diluted outstanding shares of common stock of the combined company on a pro forma basis as of December 31, 2023, as provided by and approved for Goldman Sachs’ use by the management of McGrath, using the treasury stock method. Goldman Sachs then multiplied the range of equity values per share of the pro forma combined company it obtained by the exchange ratio of 1.1284 (accounting for proration) shares of WillScot Mobile Mini Common Stock per share of McGrath Common Stock and added the cash consideration of $73.80 (accounting for proration) per share of McGrath Common Stock, assuming proration of 60% cash and 40% stock consideration pursuant to the Merger Agreement, to derive a range of illustrative present values per share of McGrath Common Stock ranging from $125 to $142, rounded to the nearest dollar.

Illustrative Present Value of Future Share Price Analysis — McGrath Standalone

Using the McGrath Forecasts, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of McGrath Common Stock, including the present value of cumulative future dividends in respect of the calendar years 2024 and 2025. For this analysis, Goldman Sachs first calculated the implied EV for McGrath as of December 31 for each of the calendar years 2024 and 2025 by applying a range of multiples of illustrative next twelve month (“NTM”) EV/EBITDA of 9.0x to 10.0x to estimates of McGrath’s NTM EBITDA for each of the calendar years 2024 and 2025. This illustrative range of NTM EV/EBITDA multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical NTM EV/EBITDA multiples for McGrath.

Goldman Sachs then subtracted the amount of McGrath’s forecasted net debt as of December 31 for each of the calendar years 2024 and 2025, each as provided by and approved for Goldman Sachs’ use by the management of McGrath, from the respective implied EVs in order to derive a range of illustrative equity values as of December 31 for McGrath for each of the calendar years 2024 and 2025. Goldman Sachs then divided these implied equity values by the projected year-end number of fully diluted outstanding shares of McGrath Common Stock for each of the calendar years 2024 and 2025, calculated using information provided by and approved for

 

70

Goldman Sachs’ use by the management of McGrath, to derive a range of implied future values per share of McGrath Common Stock (excluding dividends). Goldman Sachs then added the cumulative dividends per share expected to be paid to holders of shares of McGrath Common Stock through the end of each of the calendar years 2024 and 2025, as reflected in the McGrath Forecasts. Goldman Sachs then discounted these implied future equity values (including dividends) per share of McGrath Common Stock to December 31, 2023, using an illustrative discount rate of 9.6%, reflecting an estimate of McGrath’s cost of equity. Goldman Sachs derived such discount rate by application of the CAPM, which requires certain company-specific inputs, including a beta for McGrath, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $107 to $128 per share of McGrath Common Stock, rounded to the nearest dollar.

Illustrative Present Value of Future Share Price Analysis — Pro Forma Combined Company

Using the McGrath Forecasts, including the Synergy Projections, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of common stock of the combined company on a pro forma basis. For this analysis, Goldman Sachs first calculated the implied EV for the pro forma combined company as of December 31 for each of the calendar years 2024 and 2025 by applying a range of multiples of illustrative NTM EV/EBITDA of 10.0x to 11.0x to estimates of the pro forma combined company’s NTM EBITDA for each of the calendar years 2024 and 2025. This illustrative range of NTM EV/EBITDA multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical NTM EV/EBITDA multiples for McGrath and WillScot Mobile Mini.

Goldman Sachs then subtracted the amount of the pro forma combined company’s forecasted net debt as of December 31 for each of the calendar years 2024 and 2025, each as provided by and approved for Goldman Sachs’ use by the management of McGrath, from the respective implied EVs for the pro forma combined company in order to derive a range of illustrative pro forma equity values as of December 31 for the pro forma combined company for each of the calendar years 2024 and 2025. Goldman Sachs then divided these implied pro forma equity values for the pro forma combined company by the projected year-end number of fully diluted outstanding shares of common stock of the combined company on a pro forma basis for each of the calendar years 2024 and 2025, calculated using information provided by and approved for Goldman Sachs’ use by the management of McGrath, to derive a range of implied pro forma future values per share of common stock of the combined company on a pro forma basis (excluding dividends). Goldman Sachs assumed that the pro forma combined company would not pay dividends for each of the calendar years 2024 and 2025, as instructed by the management of McGrath. Goldman Sachs then discounted these implied future equity values per share of common stock of the combined company on a pro forma basis to December 31, 2023, using an illustrative discount rate of 12.2%, reflecting an estimate of the pro forma combined company’s cost of equity. Goldman Sachs derived such discount rate by application of the CAPM, which requires certain company-specific inputs, including a beta for the pro forma combined company, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then multiplied the range of equity values per share of the pro forma combined company it obtained by the exchange ratio of 1.1284 (accounting for proration) shares of WillScot Mobile Mini Common Stock per share of McGrath Common Stock and added the cash consideration of $73.80 (accounting for proration) per share of McGrath Common Stock, assuming proration of 60% cash and 40% stock consideration pursuant to the Merger Agreement. This analysis resulted in a range of implied present values of $128 to $140 per share of McGrath Common Stock, rounded to the nearest dollar.

Selected Precedent Transactions Analysis.

Goldman Sachs analyzed certain publicly available information relating to the following selected transactions in the mobile modular industry and in other industries since 2014. For each of the selected transactions, Goldman Sachs calculated and compared the implied EV of the applicable target company based on the total consideration paid in the transaction as a multiple of the target company’s LTM EV/ EBITDA based on

 

71

information in public filings, press releases and investor relations documents. While none of the companies that participated in the selected transactions are directly comparable to McGrath, the companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of McGrath’s results, market size and product profile.

The following table presents the results of this analysis:

 

		Selected Transactions				LTM EV/EBITDA Multiple
Announcement Date		Target		Acquiror
February 2023		Vesta Housing Solutions Holdings, Inc.		McGrath RentCorp			10.0x
April 2021		General Finance Corporation		United Rentals, Inc.			10.6x
March 2020		Mobile Mini, Inc.		WillScot Corporation			11.4x
November 2018		Target Logistics Management, LLC		Platinum Eagle Acquisition Corp.			10.4x
July 2018		BakerCorp International Holdings, Inc.		United Rentals, Inc.			9.0x
June 2018		Modular Space Holdings, Inc.		WillScot Corporation			9.9x
August 2017		Williams Scotsman International, Inc.		Double Eagle Acquisition Corp.			9.0x
October 2015		APR Energy plc		ACON Investments, LLC., Fairfax Financial Holdings Limited and Albright Capital Management			8.9x
November 2014		Evergreen Tank Solutions, Inc.		Mobile Mini, Inc.			9.0x

Based on the results of the foregoing calculations and Goldman Sachs’ professional judgment and experience, Goldman Sachs applied a reference range of LTM EV/EBITDA multiples of 8.9x to 11.4x to McGrath’s LTM EV/EBITDA as of December 31, 2023, as provided by and approved for Goldman Sachs’ use by the management of McGrath, to derive a range of implied EVs for McGrath. Goldman Sachs then subtracted the net debt of McGrath as of December 31, 2023, as provided by and approved for Goldman Sachs’ use by the management of McGrath, and divided the result by the number of fully diluted outstanding shares of McGrath Common Stock as of December 31, 2023, as provided by and approved for Goldman Sachs’ use by the management of McGrath, using the treasury stock method, to derive a reference range of implied values per share of McGrath Common Stock, rounded to the nearest dollar, of $84 to $117.

Premia Paid Analysis — Undisturbed Closing Stock Price

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for transactions announced from January 1, 2014 through January 26, 2024 involving a public company based in the United States as the target where the disclosed EVs for the transaction were between $1 billion and $10 billion and where more than 33%, and less than 66%, of the consideration paid in connection with the transaction consisted of stock. This analysis excluded transactions where the target’s last undisturbed closing stock price prior to announcement of the transaction was less than 90% of the target’s highest trading price in the 52 weeks prior to announcement of the transaction. The analysis also excluded transactions in the biotechnology sector. For the entire period, using publicly available information, Goldman Sachs calculated the 25th percentile and the 75th percentile premiums of the price paid in the 15 transactions relative to the target’s last undisturbed closing stock price prior to announcement of the transaction. This analysis indicated a 25th percentile premium of 7%

 

72

and 75th percentile premium of 24% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 7% to 24% to the undisturbed closing price per share of McGrath Common Stock of $111.75 as of January 26, 2024, the last trading day before the public announcement of the transaction, and calculated a range of implied equity values per share of McGrath Common Stock, rounded to the nearest dollar, of $120 to $139.

Premia Paid Analysis — 52-Week High Stock Price

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for transactions announced from January 1, 2014 through January 26, 2024 involving a public company based in the United States as the target where the disclosed EVs for the transaction were between $1 billion and $10 billion and where more than 33%, and less than 66%, of the consideration paid in connection with the transaction consisted of stock. This analysis excluded transactions in the biotechnology sector. For the entire period, using publicly available information, Goldman Sachs calculated the 25th percentile and the 75th percentile premiums of the price paid in the 48 transactions relative to the target’s highest stock closing price in the 52 weeks prior to announcement of the transaction. This analysis indicated a 25th percentile premium of negative 6% and 75th percentile premium of 11% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of (6)% to 11% to the highest closing price per share of McGrath Common Stock of $119.99 observed in the 52 weeks prior to January 26, 2024, the last trading day before the public announcement of the transaction, and calculated a range of implied equity values per share of McGrath Common Stock, rounded to the nearest dollar, of $113 to $133.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to McGrath or WillScot Mobile Mini or the Transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to the McGrath Board as to the fairness from a financial point of view of the Merger Consideration to be paid to the holders (other than WillScot Mobile Mini and its affiliates) of shares of McGrath Common Stock pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of McGrath, WillScot Mobile Mini, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The Merger Consideration was determined through arm’s-length negotiations between McGrath and WillScot Mobile Mini and was approved by the McGrath Board. Goldman Sachs provided advice to McGrath during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to McGrath or the McGrath Board or that any specific amount of consideration constituted the only appropriate consideration for the Transaction.

As described herein, Goldman Sachs’ opinion to the McGrath Board was one of many factors taken into consideration by the McGrath Board in making its determination to approve the Merger Agreement. The

 

73

foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

Goldman Sachs and its affiliates are engaged in advisory, underwriting, lending and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of McGrath, WillScot Mobile Mini, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the Transaction contemplated by the Merger Agreement. Goldman Sachs acted as financial advisor to McGrath in connection with, and participated in certain of the negotiations leading to, the Transaction. Goldman Sachs has provided certain financial advisory and/or underwriting services to McGrath and/or its affiliates from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as McGrath’s financial advisor in connection with its acquisition of VESTA Modular in February 2023 and as McGrath’s financial advisor in connection with its divestiture of its Adler Tank Rentals business in February 2023. During the two-year period ended January 28, 2024, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by Goldman Sachs Investment Banking to McGrath and/or its affiliates of approximately $12 million. During the two-year period ended January 28, 2024, Goldman Sachs Investment Banking has not been engaged by WillScot Mobile Mini or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to McGrath, WillScot Mobile Mini, and their respective affiliates for which Goldman Sachs Investment Banking may receive compensation.

The McGrath Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Transaction. Pursuant to a letter agreement dated November 1, 2021, McGrath engaged Goldman Sachs to act as its financial advisor in connection with the Transaction. The engagement letter between McGrath and Goldman Sachs provides for a transaction fee that is estimated, based on information available at the date of announcement of the Transaction, at approximately $46 million, $3 million of which became payable at the announcement of the Transaction, and the remainder of which is contingent upon consummation of the Transaction. In addition, McGrath has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Certain Unaudited Prospective Financial Information

Neither McGrath nor WillScot Mobile Mini, as a matter of course, makes public long-term forecasts or internal projections as to future performance, revenues, earnings or other results due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. In connection with the Transaction, the following unaudited prospective financial information was prepared: (i) certain unaudited prospective financial information with respect to McGrath on a standalone basis for the fiscal years 2024 through 2028, prepared by McGrath management, which we refer to as the “McGrath Forecasts,” (ii) certain unaudited prospective financial information with respect to WillScot Mobile Mini on a standalone basis for the fiscal years 2024 through 2028, prepared by WillScot Mobile Mini management, which we refer to as the “WillScot Mobile Mini Forecasts,” (iii) certain estimates of synergies that may be realized following the completion of the Transaction for fiscal years 2024 through 2028, derived from information gathered from WillScot Mobile Mini, which we refer to as the “Synergy Projections,” and (iv) certain unaudited prospective financial information with respect to the combined company on a pro forma basis after giving effect to the Transaction for fiscal years 2024 through 2028 comprised of the McGrath Forecasts, the WillScot Mobile Mini Forecasts and the Synergy

 

74

Projections, prepared by McGrath by combining the McGrath Forecasts prepared by McGrath with the WillScot Mobile Mini Forecasts and Synergy Projections, which we refer to as the “Combined Company Projections.” We refer to the McGrath Forecasts, the WillScot Mobile Mini Forecasts, the Synergy Projections and the Combined Company Projections as the “Forecasted Financial Information.” The McGrath Forecasts were provided by McGrath management to the McGrath Board for purposes of considering, analyzing and evaluating the Transaction and to Goldman Sachs, and the McGrath Board directed Goldman Sachs to use the McGrath Forecasts in connection with its financial analysis and opinion, as described in the section entitled “The Transaction — Opinion of McGrath’s Financial Advisor.”

The McGrath Forecasts and the WillScot Mobile Mini Forecasts were prepared treating McGrath and WillScot Mobile Mini, as applicable, on a standalone basis, without giving effect to the Transaction, and exclude (i) any impact of the negotiation or execution of the Merger Agreement or the Transaction; (ii) the expenses that have already been and will be incurred in connection with completing the Transaction; (iii) the potential synergies that may be achieved by the combined company as a result of the Transaction; (iv) the effect of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed or in anticipation of completing the Transaction; or (v) the effect of any business or strategic decisions or actions which may have been taken if the Merger Agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the Transaction. Because the McGrath Forecasts and the WillScot Mobile Mini Forecasts were developed for McGrath and WillScot Mobile Mini, respectively, as independent companies without giving effect to the Transaction, the respective projections do not reflect any synergies that may be realized as a result of the Transaction or any changes to McGrath’s or WillScot Mobile Mini’s respective operations or strategy that may be implemented after completion of the Transaction.

The Forecasted Financial Information is not included in this proxy statement/prospectus to influence any decision on whether to vote for the Transaction Proposal or the Adjournment Proposal, or any view on the value of McGrath, WillScot Mobile Mini or the combined company or any of their respective securities, but rather is included in this proxy statement/prospectus only to give shareholders access to certain non-public information that was provided to WillScot Mobile Mini, the McGrath Board and McGrath’s financial advisor. The inclusion of the Forecasted Financial Information should not be regarded as an indication that the McGrath Board, McGrath, the WillScot Mobile Mini Board, WillScot Mobile Mini or their respective members of management or financial advisors or any other recipient of this information considered, or now considers, them to be material information with respect to McGrath, WillScot Mobile Mini or the combined company or predictive of actual future results, and they should not be relied on as such. There can be no assurance that the projected results will be realized or that actual results of McGrath, WillScot Mobile Mini, or the post-closing combined company will not be materially lower or higher than estimated, whether or not the Transaction is completed. The Forecasted Financial Information is based solely on information available to McGrath management and WillScot Mobile Mini management, as applicable, at the time of their preparation and have not been updated or revised to reflect information or results after the date they were prepared or as of the date of this proxy statement/prospectus. McGrath may in the future report results of operations for periods included in the McGrath Forecasts that will be completed following the preparation of the McGrath Forecasts. WillScot Mobile Mini may in the future report results of operations for periods included in the WillScot Mobile Mini Forecasts that will be completed following the preparation of the WillScot Mobile Mini Forecasts. Shareholders and investors are urged to refer to McGrath’s and WillScot Mobile Mini’s periodic filings with the SEC for information on McGrath’s and WillScot Mobile Mini’s actual historical results.

The Forecasted Financial Information was not prepared with a view toward public disclosure or with a view toward compliance with GAAP, published guidelines of the SEC or published guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. In the view of McGrath management and WillScot Mobile Mini management, respectively the McGrath Forecasts and WillScot Mobile Mini Forecasts, respectively, were reasonably prepared in good faith on a basis reflecting the best available estimates and judgments at the time of preparation and presented, as of the time of preparation, to the best of the respective management’s knowledge and belief, the expected future

 

75

financial performance of McGrath and WillScot Mobile Mini, respectively, and, in the view of the WillScot Mobile Mini management, the Synergy Projections and, in the view of the McGrath and WillScot Mobile Mini managements, the Combined Company Projections were reasonably prepared in good faith on a basis reflecting the best available estimates and judgments at the time of preparation and presented, as of the time of preparation, to the best of their respective knowledge and belief, the expected future financial performance of the combined company. However, the Forecasted Financial Information is not fact and should not be relied upon as being necessarily predictive of actual future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the Forecasted Financial Information. McGrath and WillScot Mobile Mini caution that actual future results could be materially different from the Forecasted Financial Information.

Neither McGrath’s or WillScot Mobile Mini’s respective independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. McGrath’s independent registered public accounting firm, Grant Thornton LLP, has not audited, reviewed, compiled or performed any procedures with respect to this prospective financial information and, accordingly, Grant Thornton LLP does not express an opinion or any other form of assurance with respect thereto. WillScot Mobile Mini’s independent registered public accounting firm, Ernst & Young LLP, has not audited, reviewed, compiled or performed any procedures with respect to this prospective financial information and, accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect thereto.

While presented with numerical specificity, the Forecasted Financial Information is based upon a variety of estimates and assumptions that are inherently uncertain. The Forecasted Financial Information and these estimates and assumptions constitute forward looking statements and may be impacted by any number of factors, including the announcement, pendency and consummation of the Transaction, general economic conditions, trends in the business-to-business rental industry, regulatory and financial market conditions and other risks and uncertainties, including those described or incorporated by reference in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in this proxy statement/prospectus, all of which are difficult to predict and many of which are beyond the control of McGrath and WillScot Mobile Mini and will be beyond the control of the combined company following the completion of the Transaction. Also see the section entitled “Where You Can Find More Information.” The Forecasted Financial Information also reflects assumptions as to certain business decisions that are subject to change. There can be no assurance that any of the results reflected in the Forecasted Financial Information will be realized, and actual results will likely differ, and may differ materially, from those shown. Generally, the further out the period to which the Forecasted Financial Information relate, the less predictive the information becomes.

The Forecasted Financial Information includes non-GAAP financial measures for each of McGrath and WillScot Mobile Mini. Please see the tables and descriptions below for a description of how McGrath and WillScot Mobile Mini define these non-GAAP financial measures for purposes of the Forecasted Financial Information in this section. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP, and non-GAAP financial measures used by McGrath and WillScot Mobile Mini may not be comparable to similarly titled measures used by other companies. The SEC rules that would otherwise require a reconciliation of an adjusted financial measure to a GAAP financial measure do not apply to adjusted financial measures provided to a board of directors or a financial advisor in connection with a proposed business combination such as the Transaction if the disclosure is included in a document such as this proxy statement/prospectus. In addition, reconciliations of adjusted financial measures were not relied upon by the McGrath Board, the WillScot Mobile Mini Board or their respective members of management or financial advisors in connection with their respective evaluations of the Transaction. Accordingly, neither McGrath nor WillScot Mobile Mini has provided a reconciliation of the adjusted financial measures included in the Forecasted Financial Information to the relevant GAAP financial measures.

 

76

None of McGrath, WillScot Mobile Mini or the combined company or any of their respective affiliates, officers, directors, advisors or other representatives can provide any assurance that actual results will not differ, potentially materially, from the Forecasted Financial Information. Except as required by applicable law, none of McGrath, WillScot Mobile Mini or the combined company or any of their respective affiliates, officers, directors, advisors or other representatives undertakes any obligation to update, or otherwise revise or reconcile, the Forecasted Financial Information to reflect circumstances existing after the date the Forecasted Financial Information was generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Forecasted Financial Information are shown to be inappropriate. None of McGrath, WillScot Mobile Mini or the combined company or any of their respective affiliates, officers, directors, advisors or other representatives has made or makes any representation to any McGrath shareholder, WillScot Mobile Mini stockholder or other person regarding McGrath’s or WillScot Mobile Mini’s respective ultimate performance compared to the information contained in the Forecasted Financial Information or that forecasted results will be achieved. McGrath has made no representation to WillScot Mobile Mini, in the Merger Agreement or otherwise, concerning the McGrath Forecasts. WillScot Mobile Mini has made no representation to McGrath, in the Merger Agreement or otherwise, concerning the WillScot Mobile Mini Forecasts.

Certain Unaudited Prospective Financial Information Provided by WillScot Mobile Mini Management

WillScot Mobile Mini does not, as a matter of general practice, make long-term projections as to anticipated future performance available to the public, other than generally providing, on a quarterly basis, estimated ranges of certain expected financial results and operational metrics for the current or impending fiscal year in its regular earnings press releases and other investor materials. WillScot Mobile Mini avoids making public projections for extended periods due to, among other things, the unpredictability of the underlying assumptions and estimates inherent in such projections.

In connection with a possible transaction with McGrath, WillScot Mobile Mini management prepared certain non-public, unaudited prospective financial information regarding the anticipated results of operations for fiscal years 2024 through 2028 of WillScot (together, the “WillScot Mobile Mini Forecasts”). The WillScot Mobile Mini Forecasts were provided by WillScot Mobile Mini management to the WillScot Mobile Mini Board in connection with its evaluation of the Transaction. Certain of the WillScot Mobile Mini Forecasts were also provided by WillScot Mobile Mini management to McGrath management, as described below in the section entitled “— Certain Combined Company Unaudited Prospective Financial Information.”

Except as specifically noted herein, the WillScot Mobile Mini Forecasts were prepared by WillScot Mobile Mini management and are based on numerous estimates and assumptions, including assumptions regarding general market-level activity volume forecasts driven by market growth-rate projections, company-specific pricing growth projections, as well as anticipated margins and discretionary spending, and assume no new acquisitions, divestitures or new large investments or revenues. These forecasts were built on the assumption that macroeconomic conditions would remain stable in the U.S. and in the rest of North America, that the interest rate environment would remain stable, that competitor pricing would remain rational, that regulatory requirements would not change significantly, and that the tax laws, including corporate tax rates, would remain unchanged relative to such laws (including such rates).

The WillScot Mobile Mini Forecasts were based on information and market factors known to WillScot Mobile Mini management as of the time of their preparation, and do not take into account any circumstances or events occurring after such time, including the announcement of the Transaction. The WillScot Mobile Mini Forecasts reflect WillScot Mobile Mini’s business on a standalone basis, without giving effect to the Transaction, the impact of negotiating or executing the Transaction, the expenses that have been or may be incurred in connection with consummating the Transaction, or the potential synergies that may be achieved by the WillScot Mobile Mini as a result of the Transaction.

 

77

The forecasted financial information contained in this section entitled “Certain WillScot Mobile Mini Unaudited Prospective Financial Information” was not prepared for public disclosure. The inclusion of this information in this proxy statement/prospectus does not constitute an admission or representation by WillScot Mobile Mini or McGrath that the information is material. You should note that this forecasted financial information constitutes forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

The summary of the WillScot Mobile Mini Forecasts is included in this proxy statement/prospectus to give WillScot and McGrath shareholders access to non-public information that was provided to McGrath and McGrath’s financial advisor in connection with evaluating the Transaction.

WillScot Mobile Mini uses certain financial measures in the WillScot Mobile Mini Forecasts that have not been prepared in accordance with GAAP as supplemental measures to evaluate operational performance. While WillScot Mobile Mini believes that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of non-GAAP financial measures. Non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of WillScot Mobile Mini’s competitors and may not be directly comparable to similarly titled measures of WillScot Mobile Mini’s competitors or other companies generally. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Financial measures included in forecasts (including the WillScot Mobile Mini Forecasts) provided to a board of directors or financial advisor in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under the rules of the SEC, and therefore the WillScot Mobile Mini Forecasts are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the WillScot Mobile Mini Board or McGrath in connection with the Transaction. Accordingly, no reconciliation of the financial measures included in the WillScot Mobile Mini Forecasts is provided in this proxy statement/ prospectus.

The following is a summary of the metrics included in the WillScot Mobile Mini Forecasts (amounts may reflect rounding):

 

		Fiscal Year (in millions, and all amounts in USD)
		2024E				2025E				2026E				2027E				2028E
Revenue		$	2,587			$	2,819			$	3,040			$	3,250			$	3,452
WillScot Mobile Mini Adjusted EBITDA(1)		$	1,163			$	1,318			$	1,470			$	1,615			$	1,755
WillScot Mobile Mini Adjusted EBIT(2)		$	769			$	927			$	1,081			$	1,222			$	1,367
Unlevered Free Cash Flow(3)		$	662			$	692			$	768			$	866			$	967

 

(1)

A non-GAAP financial measure defined as net income (loss) before income tax expense, net interest expense, depreciation and amortization adjusted for, non-cash items considered non-core to business operations including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, non-cash charges for stock compensation plans, and other discrete expenses.

(2)	A non-GAAP financial measure defined as net income before interest expenses, taxes, non-recurring expense and certain non-cash expenses and transactions that WillScot Mobile Mini management believes are not indicative of WillScot Mobile Mini’s ongoing business.

(3)	A non-GAAP financial measure reflecting net cash provided by operating activities prior to interest expense, minus or plus, net cash used in or provided by investing activities and including estimated tax savings.

 

78

Certain Unaudited Prospective Financial Information Provided by McGrath Management

McGrath does not, as a matter of general practice, make long-term projections as to anticipated future performance available to the public. McGrath avoids making public projections for extended periods due to, among other things, the unpredictability of the underlying assumptions and estimates inherent in such projections.

In connection with McGrath’s evaluation of the Transaction, McGrath management prepared and made available to its financial advisor certain non-public, unaudited prospective financial information regarding McGrath’s anticipated results of operations for fiscal years 2024 through 2028 (the “McGrath Forecasts”). The McGrath Forecasts were provided by McGrath management to the McGrath Board in connection with its evaluation of the Transaction and were also provided by McGrath management to Goldman Sachs in connection with its analysis and opinion described in the section “Opinion of McGrath’s Financial Advisor.”

The McGrath Forecasts were prepared by McGrath management in connection with McGrath’s evaluation of the Transaction and are based on numerous estimates and assumptions, including assumptions regarding general market-level forecasts driven by market growth-rate projections, as well as anticipated margins and discretionary spending. These forecasts were built on the assumption that macroeconomic conditions would remain stable in the U.S., that the interest rate environment would remain stable, that competitor pricing would remain rational, that regulatory requirements would not change significantly, and that the tax laws, including corporate tax rates, would remain unchanged relative to such laws (including such rates). The underlying assumptions were generally based on information and market factors known to McGrath management as of their date of preparation (and, as a result do not include any adjustments for the impact or potential impact of any events that took place thereafter). The McGrath Forecasts reflect McGrath’s business on a standalone basis, without giving effect to the Transaction, the impact of negotiating or executing the Transaction, or the expenses that have been or may be incurred in connection with consummating the Transaction.

The forecasted financial information contained in this section entitled “Certain Unaudited Prospective Financial Information Provided by McGrath Management” was not prepared for public disclosure. The inclusion of this information in this proxy statement/prospectus does not constitute an admission or representation by McGrath or WillScot Mobile Mini that the information is material. You should note that this forecasted financial information constitutes forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

The summary of the McGrath Forecasts is included in this proxy statement/prospectus to give McGrath shareholders access to non-public information that was provided to the McGrath Board and McGrath’s financial advisor in connection with evaluating the Transaction.

McGrath uses certain financial measures in the McGrath Forecasts that have not been prepared in accordance with GAAP as supplemental measures to evaluate operational performance. While McGrath believes that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of non-GAAP financial measures. Non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of McGrath’s potential competitors and may not be directly comparable to similarly titled measures of WillScot Mobile or other companies generally. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Financial measures included in forecasts (including McGrath Forecasts) provided to a board of directors or financial advisor in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under the rules of the SEC, and therefore McGrath Forecasts are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the McGrath Board or McGrath’s financial advisor in connection with the Transaction. Accordingly, no reconciliation of the financial measures included in the McGrath Forecasts is provided in this proxy statement/prospectus.

 

79

The following table presents a summary of the metrics included in the McGrath Forecasts.

 

		Fiscal Year (in millions, and all amounts in USD)
		2024E				2025E				2026E				2027E				2028E
Revenue		$	920			$	1,027			$	1,150			$	1,261			$	1,324
McGrath Adjusted EBITDA(1)		$	350			$	394			$	438			$	488			$	516
McGrath Adjusted EBIT(2)		$	227			$	263			$	302			$	344			$	364
Unlevered Free Cash Flow(3)		$	51			$	101			$	150			$	185			$	230

 

(1)

“McGrath Adjusted EBITDA” is defined as McGrath’s net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation and transaction costs. McGrath Adjusted EBITDA is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward-looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward- looking measures and providing a meaningful reconciliation consistent with McGrath’s accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

(2)

“McGrath Adjusted EBIT” is defined as McGrath’s earnings before interest expense, provision for income taxes, and as burdened by share-based compensation. McGrath Adjusted EBIT is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward- looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward-looking measures and providing a meaningful reconciliation consistent with McGrath’s accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

(3)

“Unlevered Free Cash Flow” means McGrath Adjusted EBITDA as defined above, minus share-based compensation, taxes (inclusive of estimated tax savings) and capital expenditures, change in net working capital, plus sale of rental equipment, net of gain. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward-looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward-looking measures and providing a meaningful reconciliation consistent with McGrath’s accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

Certain Combined Company Unaudited Prospective Financial Information

In connection with McGrath’s evaluation of the Transaction, McGrath management prepared and made available to its financial advisor certain non-public, unaudited prospective financial information regarding WillScot Mobile Mini’s anticipated results of operations for fiscal years 2024 through 2028 giving effect to the Transaction derived from information gathered from WillScot Mobile Mini (the “Combined Company Projections” and together with the WillScot Mobile Mini Forecasts and the McGrath Forecasts, the “Prospective Financial Information”). The Combined Company Projections were prepared by McGrath management on the basis of the WillScot Mobile Mini Forecasts and the McGrath Forecasts, with certain adjustments thereto based on the Synergy Projections of $50 million in run rate cost synergies, phased in at 50% in 2024 and 100% from 2025 onward. The Combined Company Projections were provided by McGrath management to the McGrath Board in connection with its evaluation of the Transaction and were also provided by McGrath management to Goldman Sachs in connection with its analysis and opinion described in the section “Opinions of McGrath’s Financial Advisor.”

 

80

The Combined Company Projections were prepared by McGrath management in connection with McGrath’s evaluation of the Transaction and are based on combining the WillScot Mobile Mini Forecasts and the McGrath Forecasts, with certain adjustments thereto based on the Synergy Projections.

The Combined Company Projections were not prepared for public disclosure. The inclusion of this information in this proxy statement/prospectus does not constitute an admission or representation by McGrath or WillScot Mobile Mini that the information is material. You should note that the Combined Company Projections constitutes forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

The summary of the Combined Company Projections is included in this proxy statement/prospectus to give McGrath shareholders access to non-public information that was provided to the McGrath Board and McGrath’s financial advisor in connection with evaluating the Transaction.

McGrath uses certain financial measures in the Combined Company Projections that have not been prepared in accordance with GAAP as supplemental measures to evaluate operational performance. While McGrath believes that these non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of non-GAAP financial measures. Non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of WillScot Mobile Mini or McGrath’s potential competitors and may not be directly comparable to similarly titled measures of the combined company’s potential competitors or other companies generally. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Financial measures included in forecasts (including the Combined Company Projections) provided to a board of directors or financial advisor in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under the rules of the SEC, and therefore the Combined Company Projections are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the McGrath Board or McGrath’s financial advisor in connection with the Transaction. Accordingly, no reconciliation of the financial measures included in the Combined Company Projections is provided in this proxy statement/prospectus.

The following is a summary of the metrics included in the Combined Company Projections (amounts may reflect rounding):

 

		Fiscal Year (in millions, and all amounts in USD)
		2024E				2025E				2026E				2027E				2028E
Revenue		$	3,507			$	3,846			$	4,190			$	4,511			$	4,775
Combined Company Adjusted EBITDA(1)		$	1,538			$	1,762			$	1,958			$	2,153			$	2,321
Combined Company Adjusted EBIT(2)		$	1,021			$	1,240			$	1,433			$	1,616			$	1,781
Unlevered Free Cash Flow(3)		$	716			$	811			$	934			$	1,063			$	1,208

 

(1)

“Combined Company Adjusted EBITDA” is defined as the Combined Company’s net income (loss) before income tax expense, net interest expense, depreciation and amortization adjusted for non-cash items considered non-core to business operations including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, non-cash charges for stock compensation plans, and other discrete expenses. Combined Company Adjusted EBITDA is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward-looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward-looking measures and providing a meaningful reconciliation consistent with WillScot Mobile Mini and McGrath’s accounting policies for

 

81

future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

(2)

“Combined Company Adjusted EBIT” means net income (loss) before income tax expense, net interest expense, adjusted for non-cash items considered non-core to business operations including net currency gains and losses, goodwill and other impairment charges, restructuring costs, costs to integrate acquired companies, costs incurred related to transactions, other discrete expenses, and as burdened by stock-based compensation. Combined Company Adjusted EBIT is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward-looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward-looking measures and providing a meaningful reconciliation consistent with WillScot Mobile Mini and McGrath’s accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

(3)

“Unlevered Free Cash Flow” means Combined Company Adjusted EBITDA as defined above, minus share-based compensation, taxes (inclusive of estimated tax savings) and capital expenditures and before other net cash provided by operating activities prior to interest expenses, and other net cash used in or provided by investing activities, plus sale of rental equipment, net of gain. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. This forward-looking non-GAAP measure cannot be reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented without unreasonable effort. Estimating such forward-looking measures and providing a meaningful reconciliation consistent with WillScot Mobile Mini and McGrath’s accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods.

Important Information About the Unaudited Prospective Financial Information

The Prospective Financial Information contained in this section entitled “Certain Unaudited Prospective Financial Information” constitutes forward-looking information. While the Prospective Financial Information and the Synergy Projections were prepared in good faith and based on information available at the time of preparation, no assurance can be made regarding actual future events. The estimates and assumptions underlying the Prospective Financial Information and the Synergy Projections involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant uncertainties and contingencies, including, among others, risks and uncertainties described in the sections of this joint proxy statement/prospectus entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond the control of WillScot Mobile Mini and McGrath. The Prospective Financial Information and the Synergy Projections were built on the assumption that macroeconomic conditions would remain stable in the U.S. and in the rest of North America and that the interest rate environment would remain stable. There can be no assurance that the underlying assumptions or projected results will be realized, and actual results will likely differ, and may differ materially, from those reflected in this section, whether or not the Transaction is completed. In addition, because the unaudited Prospective Financial Information contained in this section covers multiple years and, in certain cases, extends many years into the future, such information by its nature becomes less predictive with each successive year. As a result, the Prospective Financial Information and the Synergy Projections cannot be considered predictive of actual future operating results, nor should it be construed as financial guidance, and this information should not be relied on as such.

Except as described above, the Prospective Financial Information and the Synergy Projections were prepared solely for internal use by McGrath and its financial advisor. The Prospective Financial Information is the responsibility of WillScot Mobile Mini management and McGrath management, and was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information,

 

82

published guidelines of the SEC regarding projections and forward-looking statements and the use of non-GAAP measures or GAAP. The inclusion of the Prospective Financial Information and the Synergy Projections in this joint proxy statement/prospectus is not an admission or representation by WillScot Mobile Mini or McGrath that such information is material or that the results contained in such information will be achieved. The Prospective Financial Information, other than the Combined Company Projections and the Synergy Projections, does not reflect the impact of the Transaction.

Neither Ernst & Young LLP nor Grant Thornton LLP have audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the Prospective Financial Information or the Synergy Projections, and, accordingly, neither Ernst & Young LLP nor Grant Thornton LLP express an opinion or any other form of assurance with respect thereto. The Ernst & Young LLP reports and the Grant Thornton LLP reports incorporated by reference into this joint proxy statement/prospectus relate to WillScot Mobile Mini’s and McGrath’s previously issued financial statements, respectively. They do not extend to the Prospective Financial Information or the Synergy Projections, and should not be read to do so. By including the Prospective Financial Information and the Synergy Projections in this joint proxy statement/prospectus, none of WillScot Mobile Mini, McGrath or any of their advisors or other representatives, including Goldman Sachs, has made or makes any representation to any person regarding the ultimate performance of WillScot Mobile Mini or McGrath in the future, compared to such information contained herein. Such information covers multiple years and such information by its nature becomes less predictive and subject to greater uncertainty with each succeeding year.

The Prospective Financial Information and the Synergy Projections are not included in this proxy statement/prospectus in order to induce any McGrath shareholder to vote in favor of the Merger Proposal or any of the other proposals to be voted on at Special Meeting or to influence any McGrath shareholder to make any investment decision with respect to the Transaction or otherwise.

EXCEPT AS MAY BE REQUIRED BY FEDERAL SECURITIES LAWS, NEITHER WILLSCOT MOBILE MINI NOR MCGRATH INTENDS TO UPDATE, AND EACH EXPRESSLY DISCLAIMS ANY RESPONSIBILITY TO UPDATE, OR OTHERWISE REVISE, THE FOREGOING PROSPECTIVE FINANCIAL INFORMATION OR SYNERGY PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE UNDERLYING ASSUMPTIONS ARE INCORRECT OR NO LONGER APPROPRIATE (EVEN IN THE SHORT TERM) OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS.

In light of the foregoing and the uncertainties inherent in the Prospective Financial Information and the Synergy Projections, WillScot Mobile Mini stockholders and McGrath shareholders are cautioned not to place undue, if any, reliance on such information.

Interests of McGrath’s Directors and Executive Officers in the Transaction

In considering the recommendation of the McGrath Board to vote for the Merger Proposal, the Merger-Related Compensation Proposal and the Adjournment Proposal, holders of McGrath Common Stock should be aware that the directors and executive officers of McGrath have interests in the Transaction that are different from, or in addition to, the interests of holders of McGrath Common Stock generally. The McGrath Board was aware of these interests and considered them, among other matters, in making its recommendation that McGrath shareholders vote to approve the Merger Proposal, the Merger-Related Compensation Proposal and the Adjournment Proposal.

These interests include, among others, the following, which items are further detailed below:

 

•

each McGrath RSU Award held by a non-employee director of McGrath will become fully vested immediately prior to the Effective Time pursuant to the terms of the award agreements;

 

83

•

at the Effective Time, each McGrath RSU Award that is outstanding and unvested as of immediately prior to the Effective Time will be assumed by WillScot Mobile Mini;

 

•

at the Effective Time, each outstanding McGrath PSU Award granted during the 2022 calendar year (each, a “McGrath 2022 PSU”) will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units deemed earned based on the McGrath Board’s good faith best estimate of projected actual performance through the end of the performance period (the “Deemed Earned Units”) and 60% of the Deemed Earned Units will be converted into Per Share Cash Consideration and 40% of the Deemed Earned Units will be converted into Per Share Stock Consideration;

 

•

at the Effective Time, each outstanding McGrath PSU Award granted during the 2023 calendar year (each, a “McGrath 2023 PSU”) will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time and 60% of the vested restricted stock units will be converted into Per Share Cash Consideration and 40% of the vested restricted stock units will be converted into Per Share Stock Consideration;

 

•

each McGrath executive officer is entitled to change in control severance payments and benefits upon a qualifying termination of employment prior to or within 12 months following the consummation of the Transaction;

 

•

Subsequent to the execution of the Merger Agreement, WillScot Mobile Mini made commitments to certain executive officers of McGrath notifying such executive officers that WillScot Mobile Mini anticipates continuing their employment following the Transaction close through at least March 31, 2025, increasing their cash severance entitlement in the event of a qualifying termination within the first year following the closing date of the Transaction, and providing that the executive officers will be eligible to receive a one-time grant of WillScot Mobile Mini performance-based restricted stock units under the WillScot Mobile Mini Holdings Corp 2020 Incentive Award Plan; and

 

•

pursuant to the terms of the Merger Agreement, McGrath’s directors and executive officers are entitled to indemnification, advancement of expenses and six years of continued liability insurance coverage. See the section entitled “Director and Officer Indemnification”.

The interests of each person who has served as an executive officer or director of McGrath since January 1, 2023, if any, are described in more detail below, and certain of them are quantified within the narrative disclosure. The Transaction will constitute a “change in control” for purposes of the compensation arrangements described below. The amounts presented in the following discussion do not reflect the impact of applicable withholding or other taxes.

Treatment of McGrath Equity Awards

Each of McGrath’s executive officers holds one or more of the following types of equity awards: McGrath RSU Awards, McGrath 2022 PSUs and McGrath 2023 PSUs. McGrath’s non-employee directors hold unvested McGrath RSU Awards, which will become fully vested immediately prior to the Effective Time pursuant to the terms of the award agreements. The Merger Agreement specifies the treatment of McGrath’s outstanding equity awards in connection with the Transaction, which will be treated as follows at the Effective Time:

 

(i)

each McGrath RSU Award that is outstanding and unvested as of immediately prior to the Effective Time will be assumed by WillScot Mobile Mini (each, a “Substitute RSU Award”), with each Substitute RSU Award being subject to the same terms and conditions as applied to the McGrath RSU Award immediately prior to the Effective Time, except that the number of shares of WillScot Mobile Mini Common Stock subject to each Substitute RSU Award will be equal to (A) the number of shares of McGrath Common Stock subject to the McGrath RSU Award immediately prior to the Effective

 

84

Time, multiplied by (B) the Exchange Ratio (with the resulting number rounded up to the nearest whole share);

 

(ii)

each McGrath RSU Award that is outstanding and vested as of immediately prior to the Effective Time (taking into account any acceleration or vesting as a result of the consummation of the Transaction), will be cancelled and converted into a right to receive the Merger Consideration, with 60% of the shares of McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Cash Consideration and 40% of the McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Stock Consideration;

 

(iii)

each outstanding McGrath 2022 PSU will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the Deemed Earned Units and 60% of the Deemed Earned Units will be converted into Per Share Cash Consideration and 40% of the Deemed Earned Units will be converted into Per Share Stock Consideration; and

 

(iv)

each outstanding McGrath 2023 PSU will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time and 60% of the vested restricted stock units will be converted into Per Share Cash Consideration and 40% of the vested restricted stock units will be converted into Per Share Stock Consideration.

The table below sets forth the number of outstanding McGrath RSU Awards, McGrath 2022 PSUs and McGrath 2023 PSUs held by each of McGrath’s executive officers as of May 31, 2024 and an estimate of the value of such awards (on a pre-tax basis) using a price per share of $126.57, which is the average closing price of a share of McGrath Common Stock over the first five business days following the public announcement of the Transaction. For McGrath 2022 PSUs, the values set forth in the table below are based on maximum performance and for McGrath 2023 PSUs, the values set forth in the table below are based on target performance. None of McGrath’s directors or executive officers holds vested McGrath RSU Awards as of May 31, 2024. Depending on the date upon which the closing of the Transaction actually occurs, certain McGrath RSU Awards, McGrath 2022 PSUs and McGrath 2023 PSUs that are unvested as of the date of this proxy statement/prospectus and that are included in the table below may vest and settle pursuant to their terms, without regard to the Transaction.

 

Name		Number of Shares Subject to Unvested McGrath RSU Awards (#)(1)				Value of Shares Subject to McGrath RSU Awards ($)				Target Number of Shares Subject to McGrath 2022 PSUs (#)(2)				Value of Shares Subject to McGrath 2022 PSUs (at maximum) ($)(2)				Target Number of Shares Subject to McGrath 2023 PSUs (#)(3)				Value of Shares Subject to McGrath 2023 PSUs (at Target) ($)(3)
Joseph F. Hanna			35,585			$	4,503,993				8,310			$	2,103,593				16,310			$	2,064,357
Keith E. Pratt			12,688			$	1,605,920				3,230			$	817,642				3,600			$	455,652
David M. Whitney			2,858			$	361,737				1,170			$	296,174				1,060			$	134,164
Tara Wescott			3,692			$	467,296				1,230			$	311,362				1,200			$	151,884
Gilda Malek			6,861			$	868,397				—				—				—				—
Kristina Van Trease			4,345			$	549,947				1,570			$	397,430				1,530			$	193,652
Philip B. Hawkins			5,981			$	757,015				2,000			$	506,280				1,970			$	249,343
John P. Skenesky			3,875			$	490,459				1,540			$	389,836				1,440			$	182,261
John P. Lieffrig			3,695			$	467,676				1,380			$	349,333				1,250			$	158,213
Nicolas C. Anderson			1,000			$	126,570				—				—				—				—
Kimberly A. Box			1,000			$	126,570				—				—				—				—
Smita Conjeevaram			1,000			$	126,570				—				—				—				—
William J. Dawson			1,000			$	126,570				—				—				—				—
Elizabeth A. Fetter			1,000			$	126,570				—				—				—				—
Bradley M. Shuster			1,000			$	126,570				—				—				—				—

 

85

 

(1)

The number of shares, includes the following unvested McGrath RSU Awards which were granted to McGrath executive officers on February 23, 2024 in respect of calendar year 2024 long-term incentive compensation awards: Mr. Hanna: 26,420; Mr. Pratt: 9,210; Mr. Whitney: 1,760; Ms. Wescott: 2,480; Ms. Malek: 4,000; Ms. Van Trease: 2,800; Mr. Hawkins: 4,000; Mr. Skenesky: 2,400; and Mr. Lieffrig: 2,400.

(2)

Represent target number of shares subject to the McGrath 2022 PSUs. Value shown assumes that McGrath 2022 PSUs are earned at 200% of target, which is the maximum level of performance achievement. Actual performance achievement and the Deemed Units may vary from this amount. The actual value of the McGrath 2022 PSUs will be based on the number of restricted stock units deemed earned based on the McGrath Board’s good faith best estimate of projected actual performance through the end of the performance period.

(3)

Represent target number of shares subject to the McGrath 2023 PSUs. Value shown assumes that 100% of McGrath 2023 PSUs are earned based on target performance, without taking into account proration. The actual value of McGrath 2023 PSUs will be based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time.

These amounts do not attempt to forecast any additional equity award grants, issuances or forfeitures that may occur prior to the closing of the Transaction following the date of this proxy statement/ prospectus. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, the actual amounts, if any, to be received by McGrath executive officers and directors may materially differ from the amounts set forth above.

2024 McGrath Equity Awards

In past years, including in calendar year 2023, the Compensation Committee of the McGrath Board has approved long-term incentive compensation awards for McGrath’s executive officers that have 50% of the equity value granted as performance-based RSUs, vesting at the end of each three-year performance period, and 50% of the equity value granted as service-based RSUs vesting over three years. In December 2023, prior to the signing of the Merger Agreement, the Compensation Committee had preliminarily approved the amount of long-term incentive compensation awards for McGrath’s executive officers for calendar year 2024, without specifying the form of such long-term incentive compensation awards. In connection with the Transaction, McGrath and WillScot Mobile Mini agreed that long-term incentive compensation awards granted in February 2024 would be granted 100% in the form of service-based RSUs, as opposed to McGrath’s historic practice of granting awards 50% in the form of performance-based RSUs. Accordingly, on February 23, 2024, McGrath granted long-term incentive compensation awards 100% in the form of service- vesting RSU awards to each of its executive officers that vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date and 34% on the third anniversary of the grant date. As discussed under “Payments and Benefits Upon Termination at or Following a Change in Control”, if the employment of any of McGrath’s executive officers is terminated without cause or the executive officer resigns for good reason within 12 months after the Transaction, subject to a release of claims, all of such executive officer’s service-vesting RSUs granted on February 23, 2024 will accelerate and vest upon such termination of employment. The amount of the service-vesting RSUs granted to each McGrath executive officer is included in the table above, which sets forth all of the outstanding McGrath equity awards held by McGrath executive officers.

Treatment of McGrath Common Stock

If the Merger Proposal is approved by McGrath shareholders, the shares of McGrath Common Stock held by the directors and executive officers of McGrath will be treated in the same manner as outstanding shares of McGrath Common Stock held by all other McGrath shareholders entitled to receive the Merger Consideration.

 

86

As of May 31, 2024, directors and executive officers of McGrath, as a group, held 377,429 outstanding shares of McGrath Common Stock. At the Effective Time, each share of McGrath Common Stock outstanding as of immediately prior to the Effective Time that is held by the directors and executive officers of McGrath will be automatically converted into the right to receive the Merger Consideration, as determined pursuant to the election and allocation procedures in the Merger Agreement. McGrath shareholders will have the opportunity to elect to receive either the Per Share Cash Consideration or the Per Share Stock Consideration in respect of their McGrath Common Stock, provided that 60% of the McGrath Common Stock will be converted into the cash consideration and 40% of the McGrath Common Stock will be converted into the stock consideration.

Payments and Benefits Upon Termination at or Following a Change in Control

McGrath has not entered into employment agreements with any of its named executive officers but instead has established a Change in Control Severance Plan and an Involuntary Termination Severance Plan for Officers. McGrath’s executive officers are eligible to receive severance payments and benefits upon certain terminations of employment, pursuant to McGrath’s Change in Control Severance Plan, Involuntary Termination Severance Plan for Officers and the Equity Plans, as described below.

Change in Control Severance Plan

McGrath maintains a “Change in Control Severance Plan” for its CEO and CFO. The Change in Control Severance Plan, as approved in 2013, contained an initial two-year term with no automatic renewal, though the McGrath Board and the Compensation Committee have renewed it since that time and most recently made changes to the plan in February 2022.

Each of Messrs. Hanna and Pratt is entitled to severance payments and termination benefits upon a termination of their employment that is a qualifying termination under McGrath’s Change in Control Severance Plan. Under the McGrath’s Change in Control Severance Plan, if Messrs. Hanna’s or Pratt’s employment is terminated other than for cause or for good reason within 12 months following a change in control, subject to a release of claims, they are entitled to: (i) two times annual base salary; (ii) two times target bonus for the year of termination; (c) medical benefits under COBRA for up to 24 months for Mr. Hanna and 12 months for Mr. Pratt; (d) outplacement assistance in accordance with the applicable McGrath policies and guidelines in effect immediately prior to termination of employment; and (e) full acceleration and vesting of any and all equity awards, which would include all Substituted RSU Awards. McGrath’s Change in Control Severance Plan does not provide for a tax gross-up. The Merger Agreement provides that WillScot Mobile Mini will honor the Change in Control Severance Plan in accordance with its terms.

Involuntary Termination Severance Plan for Executive Officers

McGrath maintains a formal Involuntary Termination Severance Plan for Officers (the “Severance Plan”) that provides for severance benefits upon a qualifying termination for officer-level positions, including each of McGrath’s executive officers.

Under the Severance Plan, upon a termination by McGrath without cause prior to a change in control or after 12 months following a change in control, subject to a release of claims, McGrath’s named executive officers are entitled to the following severance benefits: (a) for Messrs. Hanna and Pratt, a severance payment of up to the equivalent of 12 months of base salary, and for other participants, a severance payment of up to the equivalent of 6 months of base salary, (b) medical benefits under COBRA for up to 12 months, and (c) outplacement assistance in accordance with the applicable McGrath policies and guidelines in effect immediately prior to termination of employment. In the cases of Messrs. Hanna and Pratt, if they are eligible to receive severance benefits under the Change in Control Severance Plan, they would not also be eligible to receive severance benefits under the Severance Plan, but would instead receive the benefits described under Change in Control Severance Plan above.

 

87

Under the Severance Plan, upon a termination by McGrath without cause or a resignation for good reason within 12 months after a change in control, subject to a release of claims, each participant other than Messrs. Hanna and Pratt are entitled to receive (a) a severance payment of up to the equivalent of 6 months of base salary, (b) medical benefits under COBRA for up to 12 months, (c) full acceleration and vesting of any and all equity awards, which would include all Substituted RSU Awards, and (d) outplacement assistance in accordance with the applicable McGrath policies and guidelines in effect immediately prior to termination of employment. The Severance Plan does not provide for a tax gross-up. The Merger Agreement provides that WillScot Mobile Mini will honor the Involuntary Termination Severance Plan in accordance with its terms.

Acceleration Under Equity Plans

Existing McGrath equity compensation plans provide for full acceleration of equity awards upon a qualifying termination after a change in control for all employees of McGrath. Under McGrath’s 2016 Stock Incentive Plan and 2007 Stock Incentive Plan, the Substitute RSU Awards are subject to full accelerated vesting if the holder’s employment or service is terminated by WillScot Mobile Mini without cause within 12 months after the Transaction. In addition, the outstanding unvested McGrath RSU Awards held by non-employee directors of McGrath will become fully vested as of immediately prior to the Effective Date pursuant to the terms of the award agreements.

Existing McGrath equity compensation plans also provide for full acceleration of equity awards in the event that the equity awards are not assumed or replaced in a change in control. In addition, pursuant to the terms of the award agreements, in the event that a change in control occurs before the applicable performance result is determined, all outstanding McGrath 2023 PSUs will become vested assuming achievement of target performance on a pro-rated basis based on the date of such change in control. As described under “Treatment of McGrath Equity Awards” above, in connection with the Transaction, the McGrath Board determined, and the Merger Agreement provides, that (i) each outstanding McGrath 2022 PSU will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of Deemed Earned Units, with 60% of the Deemed Earned Units converted into Per Share Cash Consideration and 40% of the Deemed Earned Units converted into Per Share Stock Consideration and (ii) each outstanding McGrath 2023 PSU will accelerate and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time, with 60% of the vested restricted stock units converted into Per Share Cash Consideration and 40% of the vested restricted stock units converted into Per Share Stock Consideration.

In addition, directors and executive officers enjoy any additional rights provided under the terms of the Change in Control Severance Plan, the Severance Plan or an equity compensation award, including but not limited to the terms of McGrath’s 2016 Stock Incentive Plan, 2007 Stock Incentive Plan, or any other Company equity plan.

Annual Cash Bonus Plan

McGrath’s annual cash bonus plan for executive officers generally provides that upon such executive officer’s termination of employment without cause or resignation for good reason, which occurs prior to the end of the plan term, such executive officer would receive a pro-rated bonus based on the number of days of employment prior to such termination for the plan year, with the bonus amount calculated based on full satisfaction of the target components under the plan. If an executive officer’s employment is terminated without cause or an executive officer resigns for good reason in the middle of a plan year, such executive officer would be entitled to a pro-rated annual bonus for the year of termination. Accordingly, if the Transaction closes during the middle of a plan year and an executive officer’s employment is terminated without cause or an executive officer resigns for good reason in connection with the closing of the Transaction, then such executive officer would be entitled to a pro-rated annual bonus for the year of termination.

 

88

New Employment and Compensation Arrangements with McGrath

In connection with the Transaction, and subsequent to execution of the Merger Agreement, WillScot Mobile Mini made commitments to certain of McGrath’s executive officers other than Mr. Hanna and Mr. Pratt in the form of two separate notification letters each dated March 4, 2024 and a third notification letter dated March 25, 2024 (in the case of the third notification letter, to Messrs. Whitney, Skenesky and Lieffrig and Mses. Malek, and Wescott) (together, the “Notification Letters”) that notify the executive officers that WillScot Mobile Mini anticipates continuing the individual’s employment following the Transaction close through at least March 31, 2025. The Notification Letters further provide that the executive officers will be eligible to receive a one-time grant of WillScot Mobile Mini performance-based restricted stock units (“WillScot PSUs”) in the amount of $250,000 (for Ms. Van Trease and Messrs. Hawkins and Whitney) or $150,000 (for Messrs. Skenesky and Lieffrig and Mses. Malek and Wescott) to be issued under the WillScot Mobile Mini Holdings Corp 2020 Incentive Award Plan, subject to the approval of the Compensation Committee of the Board of Directors of WillScot Mobile Mini, which WillScot PSUs will vest based on the achievement of certain performance criteria (which criteria is not stated in the letter) over a three-year period. The Notification Letters further state that if the executive officer’s employment is terminated without cause within one year following the Transaction close, then all unvested WillScot PSUs will vest at target performance level. The Notification Letters further state that the executive officer will receive, as part of his or her severance package, 12 months of base salary (for Mses. Van Trease, Malek and Wescott and Messrs. Hawkins, Whitney, Skenesky and Lieffrig) rather than 6 months of base salary, in the event of a qualifying termination within the first year following the closing date of the Transaction.

Any executive officers who become officers or employees or who otherwise are retained to provide services to WillScot Mobile Mini after the Transaction close may also enter into new individualized compensation arrangements and may participate in cash or equity incentive or other benefit plans maintained by WillScot Mobile Mini. As of the date of this proxy statement/prospectus, no other new individualized compensation arrangements between such person and WillScot Mobile Mini have been established.

Indemnification and Insurance

The Merger Agreement provides that, for a period of six years following the completion of the Transaction, WillScot Mobile Mini will maintain in effect the current directors’ and officers’ liability insurance policies maintained by McGrath (provided that WillScot Mobile Mini may substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions that are no less advantageous to the insured) with respect to claims arising from facts or events that occurred at or before the Effective Time; provided, however, that WillScot Mobile Mini will not be obligated to expend, on an aggregate basis, an amount in excess of 300% of the current annual premium paid as of the date of the Merger Agreement by McGrath for such insurance (the “Premium Cap”), and if the premiums for such insurance would at any time exceed the Premium Cap or such coverage is not otherwise available, then WillScot Mobile Mini will maintain insurance policies that, in WillScot Mobile Mini’s good faith determination, provide the maximum coverage available at an aggregate premium equal to the Premium Cap. In lieu of the foregoing, McGrath may (and at the request of WillScot Mobile Mini, McGrath will use its reasonable best efforts to) obtain at or prior to the Effective Time a six (6)-year “tail” policy under McGrath’s existing directors’ and officers’ insurance policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium Cap.

Potential Payments upon Termination or Change-in-Control

In accordance with Item 402(t) of Regulation S-K promulgated by the SEC, the table below sets forth the compensation that is based on, or otherwise relates to, the Transaction that may be paid or become payable to each of McGrath’s named executive officers in connection with the Transaction. Please see the previous portions

 

89

of this section for further information regarding this compensation. Under the applicable SEC rules, McGrath’s named executive officers (each, an “NEO”) are as set forth below:

 

•

Joseph F. Hanna, President and Chief Executive Officer;

 

•

Keith E. Pratt, Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary;

 

•

Philip B. Hawkins, Senior Vice President and Division Manager, Mobile Modular;

 

•

Melodie Craft, former Vice President Legal Affairs and Risk Management and Corporate Secretary;

 

•

Gilda Malek, Vice President, General Counsel and Corporate Secretary; and

 

•

Kristina Van Trease, Senior Vice President, Chief Strategy Officer.

Melodie Craft, former Vice President Legal Affairs and Risk Management of McGrath, was an NEO prior to March 10, 2023, at which time Ms. Craft and McGrath mutually agreed that Ms. Craft would resign from McGrath. In connection with her resignation, McGrath agreed to make the following payments to Ms. Craft: (a) a special cash payment of $345,000.24 (equal to twelve months of Ms. Craft’s base salary); (b) a 2022 priority bonus of $86,250.06; (c) a 2022 profitability bonus in the amount of $129,935.72; and (d) a cash stipend of $19,724.04 as a COBRA subsidy. Ms. Craft also received six months of outplacement assistance and the performance stock units and restricted stock units previously awarded to Ms. Craft and scheduled to vest prior to May 1, 2023 became fully vested. Ms. Malek was appointed as McGrath’s Vice President, General Counsel and Corporate Secretary, effective March 21, 2023 and has been included in the table below despite not being a NEO for purposes of McGrath’s most recent summary compensation table.

The amount of payments and benefits that each named executive officer would receive (on a pre-tax basis), as set forth in the table below, is based on the following assumptions:

 

•

the closing date of the Transaction is May 31, 2024, which is the latest practicable date prior to this filing and used solely for purposes of this golden parachute compensation disclosure;

 

•

the NEOs of McGrath experience a qualifying termination immediately following the assumed closing date of the Transaction that results in change in control severance benefits becoming payable to him or her under such individual’s applicable McGrath Change in Control Severance Plan or Severance Plan without taking into account any possible reduction that might be required to avoid the excise tax in connection with Section 280G under Section 4999 of the Code;

 

•

WillScot Mobile Mini honors the terms of the Notification Letters by providing enhanced severance to each eligible executive officer in the event of a qualifying termination within the first year following the closing date of the Transaction and granting them WillScot PSUs, which vest at target performance levels on the executive officer’s qualifying termination;

 

•

the NEO’s base salary rate and target annual bonus remain unchanged from those in effect as of the date of this proxy statement/prospectus;

 

•

the McGrath equity awards that are outstanding as of May 31, 2024 are the equity awards that McGrath has granted to its NEOs through, and are outstanding as of, the closing date of the Transaction; and

 

•

the per share value of McGrath’s common stock is $126.57, which is the average closing price of a share of McGrath common stock over the first five business days following the public announcement of the Transaction.

The amounts below do not include the value of benefits which the NEOs are already entitled to or vested in as of the assumed date of the Transaction without regard to the occurrence of a change in control, and do not reflect any possible reductions under the Section 280G “net-better” cutback provisions included in the McGrath Change in Control Severance Plan and the Severance Plan. In addition, these amounts do not include any other incentive award grants, issuances or forfeitures that may be made or occur, or future dividends or dividend

 

90

equivalents that may be accrued, prior to the completion of the Transaction. The amounts shown are estimates of amounts that would be payable to the NEOs based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement/prospectus. Some of the assumptions are based on information not currently available. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by an NEO may materially differ from the amounts set forth below.

Golden Parachute Compensation

 

Named Executive Officer		Cash ($)(1)				Equity ($)(2)				Perquisites/ Benefits ($)(3)				Total ($)
Joseph F. Hanna			3,753,005				7,478,515				59,709				11,291,229
Keith E. Pratt			1,793,574				2,615,696				49,088				4,458,357
Philip B. Hawkins			562,131				1,368,475				39,422				1,970,028
Gilda Malek			531,366				868,397				28,927				1,428,690
Kristina Van Trease			437,213				1,029,014				7,500				1,473,727

 

(1)

Cash. The amounts in this column represent: (i) for Messrs. Hanna and Pratt, an amount equal to two times the sum of their annual base salary and annual target bonus for the year of termination, and (ii) for Mses. Malek and Van Trease and Mr. Hawkins, an amount equal to 12 months of their annual base salary and prorated target annual bonus for the year of termination. Such cash severance payments are “double trigger” and become payable only upon a qualifying termination within 12 months following the Effective Time. The estimated amount of each such severance payment is shown in the following table.

 

Named Executive Officer		Severance ($)				Prorated Bonus ($)				Total ($)
Joseph F. Hanna			3,400,000				353,005				3,753,005
Keith E. Pratt			1,664,000				129,574				1,793,574
Philip B. Hawkins			450,000				112,131				562,131
Gilda Malek			440,000				91,366				531,366
Kristina Van Trease			350,000				87,213				437,213

 

(2)

Equity Awards. The amounts in this column represent the aggregate estimated value payable to the NEOs in respect of (i) the unvested McGrath RSU Awards (calculated by multiplying the total number of McGrath Common Stock subject to such McGrath RSU Awards held by the NEO, as applicable, by the Merger Consideration), (ii) the unvested McGrath 2022 PSUs (calculated by multiplying the maximum number of restricted stock units that could be earned under the awards by the Merger Consideration), and (iii) the unvested McGrath 2023 PSUs (calculated by multiplying the target number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and May 31, 2024 by the Merger Consideration), in each case, in accordance with the Merger Agreement and without regard to applicable taxes and withholdings. The outstanding unvested McGrath PSU Awards, including both the McGrath 2022 PSUs and the McGrath 2023 PSUs, held by the NEOs will become vested in connection with the Transaction and are considered payable pursuant to “single trigger” arrangements. The unvested McGrath RSU Awards will be converted into Substitute RSU Awards which will become vested if the NEO experiences a qualifying termination within 12 months after the closing of the Transaction, and therefore, are considered subject to “double trigger” vesting acceleration. The estimated value of each such equity award is shown in the following table. As discussed above, these

 

91

calculations assume, among other things, the closing date of the Transaction to be May 31, 2024 (which is the assumed date solely for purposes of this golden parachute compensation disclosure).

 

Name		McGrath RSU Awards ($)				McGrath 2022 PSUs ($)				McGrath 2023 PSUs ($)				Total ($)
Joseph Hanna			4,503,993				2,103,593				870,928				7,478,515
Keith E. Pratt			1,605,920				817,642				192,133				2,615,696
Philip B. Hawkins			757,015				506,280				105,180				1,368,475
Gilda Malek			868,397				—				—				868,397
Kristina Van Trease			549,947				397,430				81,638				1,029,014

 

(3)

Perquisites/Benefits. Amounts shown reflect the value of the applicable multiple of continued COBRA coverage payable to the NEOs (and the NEO’s spouse and dependents, as applicable), as well as the reasonable outplacement assistance (in the amount of $15,000 for each of Messrs. Hanna and Pratt and $7,500 for McGrath’s other NEOs). Such benefits are “double trigger” and become payable only upon a qualifying termination under the terms of McGrath’s Change in Control Severance Plan or the Severance Plan, as applicable.

The calculations in the tables above are hypothetical estimates based on the assumptions discussed above, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, and do not reflect certain compensation actions that may occur before the completion of the Transaction. The actual amount of payments and benefits that each of McGrath’s NEOs receive in connection with the Transaction may be higher or lower than those appearing in the table above.

Assuming that each NEO does not experience a qualifying termination, within 12 months of the completion of the Transaction, the NEOs would not be entitled to the change in control severance payments and benefits and accelerated vesting of the Substitute RSUs, which are considered “double trigger” arrangements pursuant to McGrath’s Change in Control Severance Plan and Involuntary Termination Severance Plan for Officers. Each NEO would be entitled to receive accelerated vesting of the McGrath 2022 PSUs and the McGrath 2023 PSUs in connection with the Transaction, which are considered “single trigger” arrangements.

Director and Officer Indemnification

The Merger Agreement provides that, for a period of 6 years following the completion of the Transaction, WillScot Mobile Mini shall and shall cause Merger Sub II (or any successor thereto) to maintain in effect directors’ and officers’ liability insurance policies from one or more insurance carriers with the same or better credit rating as McGrath’s insurance carrier on the date of the Merger Agreement with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as McGrath’s existing policies with respect to matters existing or occurring at or prior to the Effective Time; provided, however, that Merger Sub II will not be obligated to expend, on an aggregate basis, an amount in excess of 300% of the current annual premium paid as of the date of the Merger Agreement by McGrath for such insurance (the “Premium Cap”), and if the premiums for such insurance would at any time exceed the Premium Cap or such coverage is not otherwise available, then the Merger Sub II will obtain a policy with the maximum coverage available for a cost not exceeding the Premium Cap. In lieu of the foregoing, McGrath may, with the prior written consent of WillScot Mobile Mini, (and at the request of WillScot Mobile Mini, McGrath will use its reasonable best efforts to) obtain at or prior to the Effective Time a six (6)-year “tail” policy under McGrath’s existing directors’ and officers’ insurance policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium Cap.

Rights of McGrath Shareholders as a Result of the Transaction

Upon the completion of the Transaction, McGrath shareholders will no longer be shareholders of McGrath, but all McGrath shareholders who receive the Per Share Stock Consideration in exchange for some or all of their

 

92

shares of McGrath will become stockholders of WillScot Mobile Mini and their rights as stockholders of WillScot Mobile Mini will be governed by the terms of the DGCL, the WillScot Mobile Mini Charter and the WillScot Mobile Mini Bylaws. The terms of the WillScot Mobile Mini Charter and the WillScot Mobile Mini Bylaws will be in some respects different than the terms of the McGrath Articles and the McGrath Bylaws, and the DGCL differs in some respects from the California Corporations Code, which currently govern the rights of McGrath shareholders. For example, unlike the provisions of the governing corporate documents of McGrath, the WillScot Mobile Mini Charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions brought against WillScot Mobile Mini or its directors, officers, or other employees by its stockholders.

For a more complete description of the different rights associated with shares of McGrath Common Stock and shares of WillScot Mobile Mini Common Stock, see the section entitled “Comparison of the Rights of Stockholders.”

Treatment of Indebtedness

In connection with the Transaction, McGrath’s 2.57% Series D Notes due 2028, 2.35% Series E Notes due 2026 and 6.25% Series F Notes due 2030 (collectively, the “McGrath Notes”) will be repaid in full and McGrath’s $650.0 million revolving credit facility and $20.0 million sweep service facility will be repaid in full and terminated. For additional information about the treatment of the expected indebtedness of WillScot Mobile Mini following completion of the Transaction, see the section entitled “Description of Material Indebtedness” on page 159 of this proxy statement/prospectus.

Regulatory Approvals

Under the antitrust and competition laws of the United States, McGrath and WillScot Mobile Mini cannot consummate the Transaction until they file certain notifications and report forms with the relevant antitrust authorities that are required or deemed necessary and, where applicable, receive clearance (including the expiration or termination of applicable waiting periods) from such governmental entities to consummate the Transaction.

The requirements of the HSR Act and the related rules and regulations provide that certain acquisitions may not be completed until required information has been furnished to the Antitrust Division of the DOJ and the Premerger Notification Office of the FTC and until the waiting period under the HSR Act has expired or been terminated. Once the waiting period expires or is early terminated, the parties have satisfied their obligations under the HSR Act and the HSR Act no longer prohibits consummation of the acquisition. McGrath and WillScot Mobile Mini filed the required notifications with the Antitrust Division of the DOJ and the Premerger Notification Office of the FTC on December 22, 2023. On January 22, 2024, WillScot Mobile Mini withdrew its HSR notification and report form and re-filed the same on the same day, which began a new 30-day waiting period. On February 21, 2024, each of McGrath and WillScot Mobile Mini received a Second Request from the FTC in connection with the FTC’s review of the Transaction, which extends the waiting period until 30 days after both parties have substantially complied with the Second Request, unless the FTC early terminates the additional waiting period or the parties otherwise agree not to consummate the Transaction for a period of time after substantial compliance. McGrath and WillScot Mobile Mini have both certified substantial compliance with their respective Second Requests, with WillScot Mobile Mini certifying more recently than McGrath, on May 29, 2024. The parties have offered to provide the FTC with at least 60 days to review the Transaction, through July 28, 2024. McGrath and WillScot Mobile Mini are working with the FTC to complete its investigation as soon as practicable.

At any time before or after consummation of the Transaction, notwithstanding the expiration or termination of the waiting period applicable to the transactions contemplated by the Merger Agreement under the HSR Act, the DOJ or the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the

 

93

Transaction, to rescind the Transaction or to conditionally permit completion of the Transaction subject to regulatory conditions or other remedies. In addition, non-U.S. regulatory bodies and U.S. state attorneys general could take action under other applicable regulatory laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin or otherwise prevent the completion of the Transaction or permitting completion subject to regulatory conditions. Private parties may also seek to take legal action under regulatory laws under some circumstances. There can be no assurance that a challenge to the Transaction on antitrust or other regulatory grounds will not be made or, if such a challenge is made, that it would not be successful.

Timing of the Transaction

The parties expect the Transaction to be completed in 2024. Neither WillScot Mobile Mini nor McGrath can predict, however, the actual date on which the Transaction will be completed because it is subject to conditions beyond each company’s control, including obtaining necessary shareholder and regulatory approvals. WillScot Mobile Mini has offered an extended period to the FTC until at least July 28, 2024, for the FTC to review and respond to the parties’ submissions relating to the Transaction. However, the timeline is not binding on the FTC, which has the option to take alternative actions, including initiating legal proceedings against the parties in relation to the Transaction. For a more complete description of the conditions to the Transaction, see the section entitled “The Merger Agreement — Conditions to Completion of the Integrated Merger.”

Director and Officer Indemnification

Under the Merger Agreement, certain indemnification and insurance rights exist in favor of McGrath’s current and former directors and officers. See the section entitled “— Director and Officer Indemnification” for information about these rights.

Appraisal Rights in the Transaction

The shares of McGrath Common Stock held by McGrath shareholders who do not vote their McGrath Common Stock in favor of the Transaction or consent to the Transaction and who properly demand the purchase of such shares in accordance with Chapter 13 of the California Corporations Code will not be converted into the right to receive the Merger Consideration otherwise payable for McGrath Common Stock upon consummation of the Transaction, but will instead be converted into the right to receive such consideration as may be determined to be due pursuant to Chapter 13 of the California Corporations Code.

The following discussion is not a complete statement of the law pertaining to dissenters’ rights under the California Corporations Code. The full text of Sections 1300 through 1313 of the California Corporations Code is attached as Annex C and is incorporated herein by reference. Annex C should be reviewed carefully. The following discussion is qualified in its entirety by Annex C.

All references in Sections 1300 through 1313 of the California Corporations Code and in this summary to a “shareholder” are to the holder of record of McGrath Common Stock as to which dissenters’ rights are asserted. A person having a beneficial interest in McGrath Common Stock held of record in the name of another person, such as a broker, bank or nominee, cannot enforce dissenters’ rights directly and must act promptly to cause the holder of record to follow the steps summarized below properly and in a timely manner to perfect such person’s dissenters’ rights.

ANY HOLDER OF MCGRATH COMMON STOCK WISHING TO EXERCISE DISSENTERS’ RIGHTS IS URGED TO CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS. FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN CHAPTER 13 OF THE CALIFORNIA CORPORATIONS CODE, WHICH CONSISTS OF SECTIONS 1300-1313, WILL RESULT IN THE LOSS OF A SHAREHOLDER’S STATUTORY DISSENTERS’ RIGHTS.

 

94

Under the California Corporations Code, McGrath Common Stock must satisfy each of the following requirements to qualify as dissenting shares, which are referred to as dissenting shares:

 

•

such dissenting shares must have been outstanding on the record date;

 

•

such dissenting shares must not have been voted or consented in favor of the Merger Proposal;

 

•

the holder of such dissenting shares must timely make a written demand that McGrath repurchase such dissenting shares at fair market value (as defined below); and

 

•

the holder of such dissenting shares must submit certificates or other evidence representing such dissenting shares for endorsement (as described below).

Pursuant to Sections 1300 through 1313 of the California Corporations Code, holders of dissenting shares may require McGrath to repurchase their dissenting shares at a price equal to the fair market value of such shares determined as of the day before the first announcement of the terms of the Transaction, excluding any appreciation or depreciation as a consequence of the Transaction, but adjusted for any stock split, reverse stock split or stock dividend that becomes effective thereafter, referred to as the “fair market value.”

Within 10 days following approval of the Merger Proposal by McGrath shareholders, McGrath is required to mail a dissenter’s notice to each person who did not vote in favor of the Merger Proposal. The dissenter’s notice must contain the following:

 

•

a notice of the approval of the Merger Proposal;

 

•

a statement of the price determined by McGrath to represent the fair market value of dissenting shares (which will constitute an offer by McGrath to purchase such dissenting shares at such stated price unless such shares lose their status as “dissenting shares” under Section 1309 of the California Corporations Code);

 

•

a brief description of the procedure for such holders to exercise their rights as dissenting shareholders; and

 

•

a copy of Sections 1300 through 1304 of Chapter 13 of the California Corporations Code.

Within 30 days after the date on which the notice of the approval of the Merger Proposal by the outstanding shares is mailed to dissenting shareholders, McGrath must have received from any dissenting shareholder a written demand that McGrath repurchase such shareholder’s dissenting shares. The written demand must include the number and class of dissenting shares held of record by such dissenting shareholder that the dissenting shareholder demands that McGrath purchase. Furthermore, the written demand must include a statement of what such dissenting shareholder claims to be the fair market value of the dissenting shares (which will constitute an offer by the dissenting shareholder to sell the dissenting shares at such price). In addition, within such same 30-day period, a dissenting shareholder must submit to McGrath certificates representing any dissenting shares that the dissenting shareholder demands McGrath purchase, so that such dissenting shares may either be stamped or endorsed with the statement that the shares are dissenting shares or exchanged for certificates of appropriate denomination so stamped or endorsed. If the dissenting shares are uncertificated, then such shareholder must provide written notice of the number of shares which the shareholder demands that McGrath purchase within 30 days after the date of the mailing of the notice of the approval of the Merger Proposal. The demand, statement and McGrath certificates (or other evidence of share ownership) should be delivered by overnight courier or certified mail, return- receipt requested to:

McGrath RentCorp

5700 Las Positas Road

Livermore, CA 94551-7800

Attention: Corporate Secretary

 

95

If upon the dissenting shareholder’s surrender of the dissenting shares (if any), McGrath and a dissenting shareholder agree upon the price to be paid for the dissenting shares and agree that such shares are dissenting shares, then the agreed price is required by law to be paid (with interest thereon at the legal rate on judgments from the date of the agreement) to the dissenting shareholder within the later of (i) 30 days after the date of such agreement or (ii) 30 days after any statutory or contractual conditions to the completion of the Transaction are satisfied.

If McGrath and a dissenting shareholder disagree as to the price for such dissenting shares or disagree as to whether such shares are entitled to be classified as dissenting shares, such holder has the right to bring an action in California Superior Court of the proper county, within six months after the date on which the notice of the shareholders’ approval of the Merger Proposal is mailed, to resolve such dispute. In such action, the court will determine whether the McGrath Common Stock held by such shareholder are dissenting shares and/or the fair market value of such dissenting shares.

In determining the fair market value for the dissenting shares, the court may appoint one or more impartial appraisers to make the determination. Within a time fixed by the court, the appraisers, or a majority of them, will make and file a report with the court. If the appraisers cannot determine the fair market value within 10 days of their appointment, or within a longer time determined by the court, or the court does not confirm their report, then the court will determine the fair market value. Upon a motion made by any party, the report will be submitted to the court and considered evidence as the court considers relevant. The costs of the dissenters’ rights action, including reasonable compensation to the appraisers appointed by the court, will be allocated between McGrath and the dissenting shareholder(s) as the court deems equitable. However, if the appraisal of the fair market value of McGrath shares exceeds the price offered by McGrath in the notice of approval, then McGrath will pay the costs. If the fair market value of the shares awarded by the court exceeds 125% of the price offered by McGrath, then the court may in its discretion impose additional costs on McGrath, including attorneys’ fees, fees of expert witnesses and interest.

McGrath shareholders considering whether to exercise dissenters’ rights should consider that the fair market value of their McGrath Common Stock determined under Chapter 13 of the California Corporations Code could be more than, the same as or less than the value of consideration to be paid in connection with the Transaction, as set forth in the Merger Agreement. Also, McGrath reserves the right to assert in any appraisal proceeding that, for purposes thereof, the fair market value of dissenting shares is less than the value of the Merger Consideration to be issued and paid in connection with the Transaction, as set forth in the Merger Agreement. McGrath shareholders considering whether to exercise dissenters’ rights should consult with their tax advisors for the specific tax consequences of the exercise of dissenters’ rights.

Strict compliance with certain technical prerequisites is required to exercise dissenters’ rights. McGrath shareholders wishing to exercise dissenters’ rights should consult with their own legal counsel in connection with compliance with Chapter 13 of the California Corporations Code. Any McGrath shareholder who fails to strictly comply with the requirements of Chapter 13 of the California Corporations Code, attached as Annex C, will forfeit the right to exercise dissenters’ rights and will, instead, receive the consideration to be issued and paid in connection with the Transaction, as set forth in the Merger Agreement.

Except as expressly limited by Chapter 13 of the California Corporations Code, dissenting shares continue to have all the rights and privileges incident to their shares until the fair market value of their shares is agreed upon or determined.

Dissenting shares lose their status as “dissenting shares,” and holders of dissenting shares cease to be entitled to require McGrath to purchase such shares, upon the happening of any of the following:

 

•

the Transaction is abandoned;

 

•

the dissenting shares are transferred before their submission to McGrath for the required endorsement;

 

96

•

the dissenting shareholder and McGrath do not agree on the status of the shares as dissenting shares or do not agree on the purchase price, but neither McGrath nor the shareholder files a complaint or intervenes in a pending action within six months after McGrath mails a notice that its shareholders have approved the Transaction; or

 

•

with McGrath’s consent, the dissenting shareholder withdraws the shareholder’s demand for purchase of the dissenting shares.

Material U.S. Federal Income Tax Consequences of the Integrated Mergers

The following discussion is a summary of the material U.S. federal income tax consequences of the Integrated Mergers to U.S. Holders and Non-U.S. Holders (each as defined below) that exchange their shares of McGrath Common Stock for the Merger Consideration. The following summary is based upon the provisions of the Code, its legislative history, existing and proposed U.S. Treasury Regulations promulgated thereunder and rulings and other administrative pronouncements issued by the IRS and judicial decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect, and to differing interpretations. Any such change could affect the accuracy of the statements and conclusions set forth in this discussion.

This discussion addresses only U.S. Holders and Non-U.S. Holders who hold their McGrath Common Stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion is based upon the assumption that the Integrated Mergers will be completed in accordance with the Merger Agreement and as described in this proxy statement/prospectus. This discussion does not address any U.S. federal tax consequences other than income tax consequences (such as estate, gift or other non-income tax consequences) or any state, local or non-U.S. income or non-income tax consequences. In addition, this discussion does not purport to be a complete analysis of all of the U.S. federal income tax consequences (such as the Medicare contribution tax on net investment income or consequences that may arise under certain rules commonly referred to as the Foreign Account Tax Compliance Act (including the Treasury Regulations promulgated thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith)) that may be relevant to Holders of McGrath Common Stock in light of their particular circumstances and does not address all of the U.S. federal income tax consequences that may be relevant to particular holders of McGrath Common Stock that are subject to special rules, including, but not limited to:

 

•

banks, insurance companies, and certain other financial institutions;

 

•

regulated investment companies and real estate investment trusts;

 

•

brokers, dealers or traders in securities that use a mark to market method of tax accounting;

 

•

tax-exempt organizations or governmental organizations;

 

•

U.S. expatriates and former citizens or long-term residents of the United States;

 

•

persons holding McGrath Common Stock as part of a hedge, straddle, constructive sale, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

 

•

persons subject to special tax accounting rules as a result of any item of gross income with respect to McGrath Common Stock being taken into account in an applicable financial statement;

 

•

persons that actually or constructively own 5% or more (by vote or value) of the outstanding shares of McGrath Common Stock or, after the Transaction, the WillScot Mobile Mini Common Stock;

 

•

“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

 

•

S corporations, partnerships or other entities or arrangements treated as partnerships or other flow-through entities for U.S. federal income tax purposes (and investors therein);

 

97

•

persons subject to the “base erosion and anti-abuse” tax;

 

•

U.S. Holders having a functional currency other than the U.S. dollar;

 

•

persons who hold or received McGrath Common Stock pursuant to the exercise of any employee share option or otherwise as compensation; and

 

•

tax-qualified retirement plans.

If a partnership (or other entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds McGrath Common Stock, the tax treatment of a partner in such partnership generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. Partnerships and partners in such a partnership should consult their tax advisors about the tax consequences of the Integrated Mergers to them.

For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of McGrath Common Stock which is, or is treated for U.S. federal income tax purposes as, any of the following:

 

•

an individual who is a citizen or resident of the United States;

 

•

a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

 

•

a trust that (i) is subject to the primary supervision of a court within the United States and all substantial decisions of which are subject to the control of one or more United States persons (as defined in Section 7701(a)(30) of the Code) or (ii) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person; or

 

•

an estate, the income of which is subject to U.S. federal income taxation regardless of its source.

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of McGrath Common Stock which is neither a U.S. Holder nor a partnership (or entity or arrangement treated as a partnership for U.S. federal income tax purposes).

The following discussion is a summary of material U.S. federal income tax consequences of the Integrated Mergers to U.S. Holders and Non-U.S. Holders under current law and is for general information only. All stockholders should consult their tax advisors as to the tax consequences of the Integrated Mergers in their particular circumstances, including the applicability and effect of U.S. federal, state, local or non-U.S. income or other tax laws.

U.S. Federal Income Tax Treatment of the Integrated Mergers

Based on certain representations, covenants and assumptions described below, all of which must continue to be true and accurate in all material respects as of the effective time of the Integrated Mergers, it is the opinion of each of Morrison & Foerster LLP, counsel to McGrath, and Allen Overy Shearman Sterling US LLP, counsel to WillScot Mobile Mini (together, the “tax counsels”), that, for U.S. federal income tax purposes, the Integrated Mergers, taken together will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. However, the completion of the Integrated Mergers is not conditioned upon the receipt of an opinion of counsel to the effect that the Integrated Mergers will qualify for the Intended Tax Treatment. In addition, neither McGrath nor WillScot Mobile Mini intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Integrated Mergers. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge.

The opinions of the tax counsels regarding the Integrated Mergers have relied on (1) representations and covenants made by McGrath and WillScot Mobile Mini as of the date of this proxy statement/ prospectus,

 

98

including those contained in certificates of officers of McGrath and WillScot Mobile Mini, and (2) specified assumptions, including an assumption regarding the completion of the Integrated Mergers in the manner contemplated by the Merger Agreement. In addition, the opinions of the tax counsels have assumed the absence of changes in existing facts or in law between the date of this proxy statement/ prospectus and the closing date of the Integrated Mergers. If any of those representations, covenants or assumptions is inaccurate, the tax consequences of the Integrated Mergers could differ from those described in the opinions that the tax counsels have delivered.

If, at the effective time of the Integrated Mergers, any requirement for the Integrated Mergers to qualify for the Intended Tax Treatment is not satisfied, a U.S. Holder would generally recognize gain or loss upon the exchange in an amount equal to the difference, if any, between (1) the sum of the fair market value of the WillScot Mobile Mini Common Stock and the amount of cash received (including any cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock), and (2) such U.S. Holder’s tax basis in the McGrath Common Stock surrendered in the exchange. Gain must be calculated separately for each block of McGrath Common Stock exchanged by such U.S. Holder if such blocks were acquired at different times or for different prices. Any gain so recognized generally would be long-term capital gain if the U.S. Holder’s holding period in a particular block of McGrath Common Stock exceeds one year at the effective time of the Transaction. Long-term capital gain of non-corporate U.S. Holders (including individuals) currently is eligible for preferential U.S. federal income tax rates. The deductibility of capital losses is subject to limitations. A U.S. Holder’s holding period in WillScot Mobile Mini Common Stock received in the Integrated Mergers would begin on the day following the Integrated Mergers.

The remainder of this discussion assumes that the Integrated Mergers will qualify for the Intended Tax Treatment.

Tax Consequences of the Mergers to U.S. Holders

The U.S. federal income tax consequences to U.S. Holders who exchange share of McGrath Common Stock for the Merger Consideration pursuant to the Integrated Mergers are as follows:

 

•

a U.S. Holder who receives solely WillScot Mobile Mini Common Stock (other than cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock) generally will not recognize gain or loss;

 

•

a U.S. holder who receives solely cash generally will recognize gain or loss in an amount equal to the difference between the amount of cash received and such U.S. Holder’s tax basis in the shares of McGrath Common Stock surrendered in exchange therefor; and

 

•

a U.S. Holder who receives a combination of shares of WillScot Mobile Mini Common Stock and cash (other than cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock) generally will recognize gain (but not loss) in an amount equal to the lesser of (1) the amount of cash received (other than any cash received in lieu of a fractional share of WillScot Mobile Mini Common Stock) and (2) the excess of the sum of the amount of cash and the fair market value of the WillScot Mobile Mini Common Stock received over such U.S. Holder’s tax basis in the shares of McGrath Common Stock surrendered in exchange therefor, and such U.S. Holder will not be able to recognize any loss.

Any recognized gain will generally be long-term capital gain if the U.S. Holder’s holding period with respect to the shares of McGrath Common Stock surrendered is more than one year. Long-term capital gain of non-corporate U.S. Holders (including individuals) currently is eligible for preferential U.S. federal income tax rates. If a U.S. Holder acquired different blocks of shares of WillScot Mobile Mini Common Stock at different times or different prices, any gain or loss generally will be determined separately for each identifiable block of shares. U.S. Holders should consult their tax advisors regarding the manner in which the Merger Consideration

 

99

should be allocated among different blocks of shares of McGrath Common Stock surrendered and the determination of the tax bases and holding periods of any WillScot Mobile Mini Common Stock received. The deductibility of capital losses is subject to limitations.

In some cases, if a U.S. Holder actually or constructively owns WillScot Mobile Mini Common Stock after the completion of the Integrated Mergers, the recognized gain could be treated as having the effect of a distribution of a dividend under the tests set forth in Section 302 of the Code, in which case such U.S. Holder could have dividend income up to the amount of any cash consideration received. Because the possibility of dividend treatment depends primarily upon the particular circumstances of a U.S. Holder, including the application of certain constructive ownership rules, U.S. Holders should consult their tax advisors regarding the potential tax consequences of the Integrated Mergers to them, and U.S. Holders that are corporations should consult their tax advisors regarding the potential applicability of the “extraordinary dividend” provisions of the Code.

The aggregate tax basis of the WillScot Mobile Mini Common Stock received (including fractional shares deemed received and redeemed as described in the section entitled “Cash in Lieu of a Fractional Share” below) will be equal to the aggregate adjusted tax basis of the shares of McGrath Common Stock surrendered, reduced by the amount of cash consideration received by the U.S. Holder (excluding any cash in lieu of a fractional share) and increased by the amount of gain (excluding any gain recognized with respect to cash in lieu of a fractional share), if any, recognized by the U.S. Holder in the Integrated Mergers. The holding period of any WillScot Mobile Mini Common Stock received (including fractional shares deemed received and redeemed as described in the section entitled “Cash in Lieu of a Fractional Share” below) will include the holding period of the shares of McGrath Common Stock surrendered.

Cash in Lieu of a Fractional Share

A U.S. Holder who receives cash in lieu of a fractional share of WillScot Mobile Mini Common Stock will be treated as having received the fractional share pursuant to the Integrated Mergers and then as having exchanged that fractional share with WillScot Mobile Mini for cash in a redemption transaction.

A U.S. Holder receiving cash in lieu of a fractional share of WillScot Mobile Mini Common Stock will generally recognize gain or loss equal to the difference between the amount of cash received and such U.S. Holder’s tax basis in such fractional share of WillScot Mobile Mini Common Stock. Any gain or loss recognized generally will be long-term capital gain or loss if the U.S. Holder’s holding period in such WillScot Mobile Mini Common Stock, as determined in accordance with the rules discussed above, exceeds one year at the closing of the Integrated Mergers. The deductibility of capital losses is subject to limitations.

In some cases, if a U.S. Holder actually or constructively owns WillScot Mobile Mini Common Stock after the Integrated Mergers, the recognized gain could be treated as having the effect of the distribution of a dividend under the tests set forth in Section 302 of the Code, in which case such U.S. Holder could have dividend income up to the amount of the cash consideration received. Because the possibility of dividend treatment depends primarily upon the particular circumstances of a U.S. Holder, including the application of certain constructive ownership rules, U.S. Holders should consult their tax advisors regarding the potential tax consequences of the Integrated Mergers to them, and U.S. Holders that are corporations should consult their tax advisors regarding the potential applicability of the extraordinary dividend” provisions of the Code.

Information Reporting and Backup Withholding

Any cash payments to a U.S. Holder in connection with the Integrated Mergers may, under certain circumstances, be subject to information reporting and backup withholding (currently at a rate of 24%), unless the holder provides proof of an applicable exemption or furnishes its taxpayer identification number (generally on a properly completed IRS Form W-9), and otherwise complies with all applicable requirements of the backup withholding rules. Certain U.S. Holders (such as corporations) are exempt from backup withholding.

 

100

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or credit against a U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

Material U.S. Federal Income Tax Consequences of the Integrated Mergers to Non-U.S. Holders

In general, the material U.S. federal income tax consequences of the Integrated Mergers to a Non-U.S. Holder that exchanges its shares of McGrath Common Stock for the Merger Consideration will be the same as those described above for a U.S. Holder, except that, regardless of whether the Integrated Mergers qualify for the Intended Tax Treatment, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized in connection with the Integrated Mergers unless:

 

•

such gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable tax treaty, is attributable to a permanent establishment of the Non-U.S. Holder in the United States);

 

•

the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 days or more in the taxable year in which the Integrated Mergers occur and certain other conditions are met; or

 

•

shares of McGrath Common Stock constituted a “United States real property interest” by reason of (1) McGrath’s status as a “United States real property holding corporation”, or a USRPHC, for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the Integrated Mergers and the period that such Non-U.S. Holder held shares of McGrath Common Stock, and (2) such Non-U.S. Holder owning more than 5 percent of McGrath Common Stock during such period.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular U.S. federal income tax rates in the same manner as if such Non-U.S. Holder were a U.S. Holder. A Non-U.S. Holder that is a corporation also may be subject to an additional branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable tax treaty) on its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax with respect to such gain at a 30% rate (or such lower rate as may be specified by an applicable tax treaty), which may be offset by such Non-U.S. Holder’s U.S. source capital losses, if any, provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, McGrath does not believe that it is, or has been during the five-year period ending on the date of the Integrated Mergers, a USRPHC.

Non-U.S. Holders should consult their tax advisors regarding the potential application of tax treaties that may provide for different rules with respect to any gain recognized by a Non-U.S. Holder.

Information Reporting and Backup Withholding

A Non-U.S. Holder generally will not be subject to information reporting or backup withholding with respect to the Merger Consideration received in connection with the Integrated Mergers, provided that such Non-U.S. Holder furnishes to the applicable withholding agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN, IRS Form W-8BEN-E or IRS Form W-8ECI, as applicable, or the Non-U.S. Holder otherwise establishes an exemption.

THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSEQUENCES RELATING TO THE INTEGRATED MERGERS, AND IS NOT,

 

101

AND IS NOT INTENDED TO BE, TAX ADVICE. ALL STOCKHOLDERS ARE STRONGLY ADVISED AND ARE EXPECTED TO CONSULT THEIR LEGAL AND TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE INTEGRATED MERGERS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER U.S. FEDERAL TAX LAWS, INCLUDING ESTATE OR GIFT TAX LAWS, OR UNDER ANY STATE, LOCAL OR NON-U.S. TAX LAWS.

Accounting Treatment

The Integrated Mergers will be accounted for as a business combination in accordance with accounting principles generally accepted in the United States (“GAAP”). Under this method of accounting, WillScot Mobile Mini will be the acquirer for financial reporting purposes and will account for the Integrated Mergers using the acquisition method of accounting for business combinations in accordance with Accounting Standard Codification No. 805, “Business Combinations,” (“ASC 805”). Under ASC 805, WillScot Mobile Mini values assets acquired and liabilities assumed in a business combination at their fair values as of the acquisition date. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions by management, including estimating future cash flows, and developing appropriate discount rates.

The allocation of the estimated purchase price to assets acquired and liabilities assumed with respect to the Integrated Mergers is based on management’s preliminary estimates of and assumptions related to the fair values of assets acquired and liabilities assumed as of December 31, 2023 using currently available information and is subject to completion of the final analysis of the fair value of the assets and liabilities of McGrath RentCorp as of the Effective Time. Accordingly, the assignment of purchase price in the unaudited pro forma condensed combined financial statements is preliminary and adjustments could be material.

Under the acquisition method of accounting, the total estimated purchase price of an acquisition is allocated to the net tangible and intangible assets to be acquired based on their estimated fair values as of the date of acquisition. Such fair values are based on available information and certain assumptions that management believes are reasonable. Management has made a preliminary assignment of the estimated purchase price to the tangible (including rental equipment) and intangible assets to be acquired and liabilities to be assumed based on various preliminary assumptions and estimates. The final determination of these estimated fair values, the assets’ useful lives and the amortization methods are subject to completion of an ongoing assessment and will be available as soon as practicable but no later than one year after the consummation of the Integrated Mergers. Fair value measurements can be highly subjective, and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The results of the final assignment could be materially different from the preliminary assignment set forth in these unaudited pro forma condensed combined financial statements, including but not limited to, the assignment related to identifiable intangible assets, rental equipment, property, plant and equipment, operating lease assets, trade receivables, deferred revenue, inventories, deferred taxes, goodwill, operating lease liabilities, debt, and the resulting impacts on, among others, depreciation and amortization, interest expense and income taxes.

Nasdaq Listing; Delisting and Deregistration of McGrath Common Stock

If the Transaction is completed, WillScot Mobile Mini Common Stock will continue to trade on Nasdaq under the ticker symbol “WSC,” McGrath Common Stock will cease to be listed on Nasdaq and McGrath Common Stock will be deregistered under the Exchange Act.

Litigation Relating to the Transactions

McGrath has received four demand letters (collectively, the “Demand Letters”) from purported shareholders of McGrath generally alleging that the preliminary proxy statement attached to the Form S-4 filed by WillScot

 

102

Mobile Mini with the SEC on April 8, 2024 (the “Preliminary Proxy”), contains alleged material misstatements and omissions in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 of the Exchange Act. On April 18, 2024, one purported shareholder of McGrath commenced an action, captioned Gallatin v. McGrath RentCorp, et al., Case No. 1:24-cv-02960 (S.D.N.Y.), in the United States District Court for the Southern District of New York (the “Complaint”). The Complaint names McGrath and the members of its board of directors as defendants. The Complaint asserts claims under Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 of the Exchange Act challenging the adequacy of the disclosures in the Preliminary Proxy. The Complaint seeks, among other relief, an injunction preventing the parties from consummating the proposed transaction, damages in the event the transaction is consummated, and an award of attorneys’ fees. If additional similar demand letters are received or if additional complaints are filed, absent new or different allegations that are material, McGrath will not necessarily announce such additional filings. The Complaint is in its early stages and the ultimate resolution of it or any similar lawsuit cannot be predicted at this time. McGrath and WillScot Mobile Mini believe the allegations in the Demand Letters and the claims asserted in the Complaint are without merit.

 

103

THE MERGER AGREEMENT

This section describes the material terms of the Merger Agreement. The descriptions of the Merger Agreement in this section and elsewhere in this proxy statement/prospectus are qualified in their entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus and is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. You are encouraged to carefully read the entire Merger Agreement.

This summary is qualified in its entirety by reference to the Merger Agreement attached as Annex A to, and incorporated by reference into, this proxy statement/prospectus.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement is included to provide you with information regarding its terms. Neither the Merger Agreement nor the summary of its material terms included in this section is intended to provide any factual information about WillScot Mobile Mini or McGrath. Factual disclosures about WillScot Mobile Mini and McGrath contained in this proxy statement/prospectus and/or in the public reports of WillScot Mobile Mini and McGrath filed with the SEC (as described in the section entitled “Where You Can Find More Information”) may supplement, update or modify the disclosures about WillScot Mobile Mini and McGrath contained in the Merger Agreement. The Merger Agreement contains representations and warranties and covenants of the parties customary for a merger of this nature. The representations and warranties contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein; were made solely for the benefit of the parties to the Merger Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement except for the limited purposes expressly set forth therein and should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in WillScot Mobile Mini’s or McGrath’s public disclosures. Accordingly, the representations and warranties in the Merger Agreement should not be relied on by any persons as characterizations of the actual state of facts about WillScot Mobile Mini or McGrath at the time they were made or otherwise.

Structure of the Integrated Mergers

The Merger Agreement provides, among other matters, for the acquisition of McGrath pursuant to two successive mergers, on the terms and subject to the conditions in the Merger Agreement and in accordance with the California Corporations Code and the DLLCA. At the Effective Time, Merger Sub I will be merged with and into McGrath, with McGrath continuing as the surviving corporation in the First- Step Merger and as a direct wholly owned subsidiary of WillScot Mobile Mini. Immediately following the First-Step Merger, McGrath, as the surviving corporation in the First-Step Merger, will be merged with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the Second-Step Merger and as a direct wholly owned subsidiary of WillScot Mobile Mini (the “Surviving Company”).

Unless otherwise determined by WillScot Mobile Mini prior to the Effective Time, the officers and directors of Merger Sub I immediately prior to the Effective Time will be the initial officers and directors of the surviving corporation, until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal, and the initial managing member and officers of Merger Sub II immediately prior to the Second Effective Time will be the managing member and officers of the Surviving Company, until their

 

104

respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.

Merger Consideration

As a result of the First-Step Merger, each share of McGrath Common Stock issued and outstanding immediately prior to the Effective Time, other than (i) shares of McGrath Common Stock held by McGrath as treasury stock or owned by WillScot Mobile Mini or any subsidiary of McGrath or WillScot Mobile Mini, and (ii) Dissenting Shares, will be converted automatically into and represent the right to receive:

 

•

for each share of McGrath with respect to which an election to receive the Cash Consideration has been made and not revoked or deemed revoked (a “Cash Election”), the Per Share Cash Consideration (i.e. $123.00), subject to proration as described below;

 

•

for each share of McGrath with respect to which an election to receive the Stock Consideration has been made and not revoked or deemed revoked (a “Stock Election”), the Per Share Stock Consideration (i.e. 2.8211 shares of WillScot Mobile Mini Common Stock); or

 

•

for each share of McGrath (other than shares as to which a Cash Election or a Stock Election has been effectively made and not revoked or deemed revoked), the right to receive the Per Share Cash Consideration or Per Share Stock Consideration as described below.

The maximum number of shares of McGrath Common Stock that will be entitled to receive the Per Share Cash Consideration (the “Cash Conversion Number”) is equal to the product of (x) the total number of shares of McGrath Common Stock issued and outstanding immediately prior to the Effective Time (excluding the shares of McGrath Common Stock to be cancelled as provided in Section 3.1(a)(iii)) multiplied by (y) sixty percent (60%) (rounded down to the nearest whole number), and the maximum number of shares of McGrath Common Stock that will be entitled to receive the Per Share Stock Consideration (the “Stock Conversion Number”) is be equal to the product of (x) the total number of shares of McGrath Common Stock issued and outstanding immediately prior to the Effective Time (excluding the shares of McGrath Common Stock to be cancelled as provided in Section 3.1(a)(iii)) multiplied by (y) forty percent (40%) (rounded up to the nearest whole number).

The Merger Consideration will be adjusted appropriately to reflect the effect of any reclassification, recapitalization, stock split (including reverse stock split), merger, combination, exchange, consolidation, subdivision or readjustment of shares, subdivision, or any similar transaction, or any stock dividend after the date of the Merger Agreement and prior to the Effective Time.

No fractional shares of WillScot Mobile Mini Common Stock will be issued in the First-Step Merger. All fractional shares of WillScot Mobile Mini Common Stock that a holder of McGrath Common Stock would otherwise be entitled to receive a fractional share of WillScot Mobile Mini Common Stock shall be entitled to receive, in lieu thereof, from WillScot Mobile Mini an amount in cash (rounded to the nearest cent), without interest, determined by multiplying the fraction of such fractional share of WillScot Mobile Mini Common Stock by the arithmetic average of the closing price (rounded to the nearest one ten-thousandth) of WillScot Mobile Mini Common Stock on Nasdaq on the last five trading days preceding the Closing Date.

Oversubscription of Cash Consideration

Shares of WillScot Mobile Mini Common Stock may be issued to McGrath shareholders who make Cash Elections if the aggregate number of shares of McGrath Common Stock with respect to which a Cash Election has been made exceeds the Cash Conversion Number. If the cash consideration is oversubscribed, then:

 

•

All Stock Election Shares and all Non-Election Shares will be converted into the right to receive the Per Share Stock Consideration; and

 

105

•

A McGrath shareholder who made a Cash Election will have the right to receive (a) the Per Share Cash Consideration for a number of shares of McGrath Common Stock equal to the product obtained by multiplying (i) the number of shares of McGrath Common Stock for which such holder has made a Cash Election by (ii) a fraction, the numerator of which is the Cash Conversion Number and the denominator of which is the aggregate number of shares of McGrath Common Stock with respect to which a Cash Election has been made and (b) the Per Share Stock Consideration for the remaining shares of McGrath Common Stock for which the McGrath shareholder made a Cash Election.

Undersubscription of Cash Consideration

Cash may be issued to McGrath shareholders who make Stock Elections and/or to Non-Election shares if the number of Cash Election shares is less than the Cash Conversion Number (such difference between the number of Cash Election shares and the Cash Conversion Number, the “Shortfall Number”). If the Per Share Cash Consideration is undersubscribed, then all Cash Election shares will be converted into the right to receive the Cash Consideration. McGrath shareholders who make a Stock Election, as well as Non-Election shares, will have the right to receive cash and/or shares of WillScot Mobile Mini Common Stock based in part on whether the Shortfall Number is less or greater than the number of Non-Election shares, as described below.

 

•

If the Shortfall Number is less than or equal to the number of Non-Election shares, then (a) all Stock Election shares will be converted into the right to receive the Per Share Stock Consideration and (b) the Non-Election shares will be converted into the right to receive (i) the Per Share Cash Consideration for the number of Non-Election shares equal to the product obtained by multiplying (A) the number of Non-Election shares held by such holder by (B) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the aggregate number of Non- election Shares and (ii) the Per Share Stock Consideration for the remaining number of such holder’s Non-Election shares.

 

•

If the Shortfall number exceeds the number of Non-Election shares, then (a) all Non-Election shares will be converted into the right to receive the Per Share Cash Consideration and (b) Stock Election shares will be converted into the right to receive (i) the Per Share Cash Consideration in respect of that number of Stock Election shares equal to the product obtained by multiplying (A) the number of Stock Election shares held by such holder by (B) a fraction, the numerator of which is the Stock Conversion Number, and the denominator of which is the aggregate number of Stock Election shares and (ii) the Per Share Stock Consideration for the remaining number of such holder’s Stock Election shares.

Election Procedures; Exchange of Shares

Election Procedures

Each McGrath shareholder of record may specify (i) the number of shares of McGrath Common Stock owned by such holder with respect to which such McGrath shareholder desires to make a stock election and (ii) the number of shares of McGrath Common Stock owned by such holder with respect to which such McGrath shareholder desires to make a cash election. At any time during the Election Period (as defined below), each McGrath shareholder may change or revoke such McGrath shareholder’s election by written notice to the Exchange Agent prior to the election deadline accompanied by a properly completed and signed revised form of election.

Additionally, each McGrath shareholder may, at any time during the election period, revoke his, her or its election by written notice received by the Exchange Agent prior to the election deadline or by withdrawal prior to the election deadline of his, her or its old certificates, or of the guarantee of delivery of such old certificates, previously deposited with the Exchange Agent. All elections will be automatically deemed revoked upon receipt by the Exchange Agent of written notification from the parties that the merger agreement has been terminated in accordance with the terms thereof.

Under the terms of the Merger Agreement, WillScot Mobile Mini has agreed to prepare an election form reasonably acceptable to McGrath, including appropriate and customary transmittal materials, so as to permit

 

106

McGrath shareholders of record to exercise their right to make an election. WillScot Mobile Mini will initially make available and mail the form of election not less than twenty business days prior to the anticipated election deadline to McGrath shareholders of record as of the business day prior to such mailing date. Following such mailing date, WillScot Mobile Mini will use all reasonable efforts to make available as promptly as possible a form of election to any McGrath shareholder who requests such form of election prior to the date that is expected to be 5:00 p.m. Eastern Time on the date WillScot Mobile Mini and McGrath agree is as near as practicable to three business days before the Closing Date (the “Election Deadline”).

Any election will have been made properly only if the Exchange Agent receives a duly completed and signed election form (including duly executed transmittal materials included in the form of election) during the Election Period. In order for an election form to be duly delivered to the Exchange Agent during the election period, the election form must be accompanied by any old certificates representing all certificated shares to which such form of election relates or by an appropriate customary guarantee of delivery of such old certificates, as set forth in such form of election, from a member of any registered national securities exchange or a commercial bank or trust company in the United States.

WillScot Mobile Mini and McGrath have agreed to cooperate to issue a press release reasonably satisfactory to each of them announcing the date of the Election Deadline not more than fifteen business days before, and at least ten business days prior to, the Election Deadline.

Subject to the terms of the Merger Agreement and the form of election, WillScot Mobile Mini, in the exercise of its reasonable, good faith discretion, has the right to make all determinations, not inconsistent with the terms of the Merger Agreement, governing (i) the validity of the forms of election and compliance by any holder with the election procedures set forth therein, (ii) the method of issuance and delivery of new certificates representing the whole number of shares of WillScot Mobile Mini Common Stock into which shares of McGrath Common Stock are converted in the First-Step Merger and (iii) the method of payment of cash for shares of McGrath Common Stock converted into the right to receive the Per Share Cash Consideration and cash in lieu of fractional shares of WillScot Mobile Mini Common Stock.

All shares of WillScot Mobile Mini Common Stock issued pursuant to the Merger Agreement will be in uncertificated book-entry form, unless a physical certificate is required under applicable law.

Letter of Transmittal

As promptly as practicable after the Effective Time, but in any event within one business day thereafter, the Exchange Agent to send to each holder of record of shares of McGrath Common Stock who did not submit a form of election as described above a letter of transmittal and instructions on how to surrender shares of McGrath Common Stock in exchange for the Merger Consideration the holder is entitled to receive under the Merger Agreement.

If a certificate for McGrath Common Stock has been lost, stolen or destroyed, the Exchange Agent will issue the Merger Consideration upon receipt of (i) an affidavit of that fact by the claimant and (ii) if required by WillScot Mobile Mini, the posting of a bond in customary amount and upon such terms as may be necessary as indemnity against any claim that may be made against it with respect to such certificate.

Following completion of the First-Step Merger, there will be no further transfers on the stock transfer books of McGrath of shares of McGrath Common Stock that were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, old certificates representing shares of McGrath Common Stock are presented for transfer to the Exchange Agent, they will be cancelled and exchanged for the Merger Consideration and cash in lieu of fractional shares and dividends or distributions to which the holder presenting such old certificates is entitled.

 

107

Withholding

WillScot Mobile Mini, the Merger Subs and the Exchange Agent will be entitled to deduct and withhold from the Merger Consideration any cash in lieu of fractional shares of WillScot Mobile Mini Common Stock, cash dividends or distributions payable or any other cash amount payable under the Merger Agreement to any person the amounts they are required to deduct and withhold under the Code or any applicable provision of federal, state, local or foreign tax law. If any such amounts are so withheld and paid over to the appropriate governmental authority, these amounts will be treated for all purposes of the Merger Agreement as having been paid to the stockholders from whom they were withheld.

Treatment of McGrath Equity Awards

McGrath Incentive Plans

At the Effective Time, WillScot Mobile Mini will assume McGrath’s 2016 Stock Incentive Plan and McGrath’s 2007 Stock Incentive Plan.

McGrath SARs

Each McGrath SAR that is outstanding, vested and unexercised as of immediately prior to the Effective Time (taking into account any acceleration of vesting as a result of the consummation of the Transaction) will be cancelled and converted into a right to receive a cash payment equal to the number of shares of McGrath Common Stock subject to such McGrath SAR, multiplied by the Per Share Cash Consideration minus the applicable exercise price per share of such McGrath SAR.

McGrath RSU Awards

Each McGrath RSU Award that is outstanding and unvested as of immediately prior to the Effective Time (taking into account any acceleration of vesting as a result of the consummation of the Transaction) will be assumed by WillScot Mobile Mini and converted into a restricted stock unit award with respect to WillScot Mobile Mini Common Stock (each, a “Substitute RSU Award”), with each Substitute RSU Award being subject to the same terms and conditions as applied to McGrath RSU Award immediately prior to the Effective Time, except that the number of shares of WillScot Mobile Mini Common Stock subject to each Substitute RSU Award will be equal to (A) the number of shares of McGrath Common Stock subject to McGrath RSU Award immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio (with the resulting number rounded up to the nearest whole share).

Each McGrath RSU Award that is outstanding and vested as of immediately prior to the Effective Time (taking into account any acceleration or vesting as a result of the consummation of the Integrated Mergers), will be cancelled and converted into a right to receive the Merger Consideration, with 60% of the shares of McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Cash Consideration and 40% of the McGrath Common Stock underlying such McGrath RSU Award converted into Per Share Stock Consideration;

McGrath PSU Awards

Each McGrath PSU Award granted during the 2022 calendar year that is outstanding and unvested as of immediately prior to the Effective Time will accelerate and vest, and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units deemed earned based on the Board’s good faith best estimate of projected actual performance through the end of the performance period (the “Deemed Earned Units”) and 60% of the Deemed Earned Units converted into the right to receive the Per Share Cash Consideration and 40% of the Deemed Earned Units converted into the right to receive the Per Share Stock Consideration; and

 

108

Each McGrath PSU Award granted during the 2023 calendar year will accelerate and vest, and be cancelled and converted into a right to receive the Merger Consideration, with such conversion based on the number of restricted stock units that would vest if target performance was achieved and pro-rated based on the number of days elapsed between the grant date and the Effective Time and 60% of the vesting restricted stock units converted into Per Share Cash Consideration and 40% of the vesting restricted stock units converted into Per Share Stock Consideration.

Closing and Effectiveness of the Integrated Mergers

Unless WillScot Mobile Mini and McGrath mutually agree in writing to another time, date or place, the closing of the Integrated Mergers shall take place remotely via the electronic exchange of documents and signatures or in New York City at the offices of Allen Overy Shearman Sterling US LLP, 1221 Avenue of the Americas, New York, New York, 10020 at 10:00 a.m., Eastern time, on the third business day after the date the conditions set forth in the Merger Agreement (other than conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or permitted waiver of such conditions) have been satisfied or waived.

The First-Step Merger will become effective at the time when the certificate of merger has been duly filed with the Secretary of State of the State of California or such later time as WillScot Mobile Mini and McGrath shall agree and is specified in the certificate of merger. The Second-Step Merger will become effective at the time when the certificate of merger has been duly filed with the Secretary of State of the State of Delaware or such later time as WillScot Mobile Mini and McGrath shall agree and is specified in the certificate of merger.

Representations and Warranties; Material Adverse Effect

The Merger Agreement contains representations and warranties by McGrath, WillScot Mobile Mini, Merger Sub I and Merger Sub II that are subject to certain exceptions and qualifications (including exceptions and qualifications related to knowledge, materiality and material adverse effect).

The Merger Agreement contains representations and warranties by McGrath relating to, among other things, the following:

 

•

due organization, valid existence, good standing and qualification to do business of McGrath and its subsidiaries;

 

•

corporate authorization and enforceability of the Merger Agreement;

 

•

required consents and approvals from governmental entities;

 

•

the absence of any conflicts or violations of organizational documents and other agreements or laws;

 

•

capitalization and ownership of subsidiaries;

 

•

documents filed with the SEC and financial statements;

 

•

accuracy of information supplied or to be supplied in connection with this joint proxy statement/ prospectus;

 

•

conduct of their businesses in the ordinary course and the absence of a material adverse effect;

 

•

the absence of certain undisclosed material liabilities;

 

•

internal controls and disclosure controls and procedures relating to financial reporting;

 

•

the absence of certain legal proceedings and investigations;

 

•

possession of, and compliance with, permits necessary for the conduct of business;

 

•

compliance with applicable laws (including certain domestic and foreign anti-corruption laws, anti- money laundering, and international trade laws and sanctions) and absence of governmental orders;

 

109