Mobile Mini has entered into a definitive agreement to sell its North American wood mobile office fleet of approximately 9,400 units to Acton Mobile Industries for total cash consideration of $92 million.
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Mobile Mini’s North American wood mobile office fleet generated approximately $46 million in revenue and $14 million in adjusted EBITDA for 2014, and has a current net book value of approximately $158 million.
The company said that benefits of the sale include:
Enhances Mobile Mini’s focus on revenue growth related to higher returning portable storage, steel ground level offices and specialty containment assets;
Increases returns through the removal of the wood mobile office business, which has an adjusted EBITDA margin of approximately 30% and is dilutive to the overall combined business;
Returns a significant amount of capital that both creates an opportunity for investments in higher returning assets and deleverages the Company’s balance sheet;
Creates available infrastructure for more cost efficient expansion of higher margin core portable storage units, steel ground level offices as well as specialty containment products nationwide; and,
Enables selective cost reductions in Mobile Mini’s branch infrastructure.
"We made a strategic decision to exit the mobile office business. While a solid business, the mobile offices have higher repair and maintenance costs, require more land, and entail significantly more employee time to lease and prepare for rental.
Furthermore, less than five percent of our customers rent both a wood mobile office and a steel portable storage product and therefore this business lacks both the synergies and returns offered by the specialty containment operations that we acquired in late 2014," said Erik Olsson, President and Chief Executive Officer of Mobile Mini.
"The integration of ETS is going very well and this divestiture, while modestly dilutive in 2015, accelerates our strategy to focus on core portable storage and specialty containment assets that generate superior returns," Mr. Olsson concluded.
Due to shared costs and infrastructure, the Company estimates the divestiture would have resulted in an approximately $19 million reduction in 2014 adjusted EBITDA, had it occurred prior to the beginning of that year.
Following the divestiture, Mobile Mini expects to incur approximately $2 million of costs related to exiting the wood mobile office business, and further expects the transaction, excluding the loss upon sale of the fleet, to be modestly dilutive to net income and earnings per share for the balance of 2015.
The companies expect to close the transaction by mid-May 2015, subject to regulatory approvals and other customary closing conditions. The transition of the business and assets to Acton will begin immediately at closing and is expected to be largely complete within a six month timeframe. ■
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