Williams Scotsman OKs merger with Paris firm

The Baltimore Sun

It hasn't been long since Williams Scotsman added "International" to its name.

But the company firmly established itself yesterday as one of the bigger players in the global market for leased modular and mobile offices, including construction trailers, after reaching a tentative agreement to merge with Paris-based Algeco, one of Europe's largest modular space rental companies.

The $2.2 billion deal would make the Williams Scotsman's White Marsh home the headquarters of the combined company and propel its chairman and chief executive officer, Gerard E. Holthaus, to the helm of Algeco's parent company, Luxembourg-based Ristretto. Algeco's chief executive, Bruno Roqueplo, would remain CEO of Algeco and report to Holthaus. Williams Scotsman would retain its name and brand - as would Algeco - as a subsidiary of Ristretto, and Holthaus would continue to serve as its CEO.

"Think of it as a very strategic combination," Holthaus said. "The buyer here views this as a very good global expansion opportunity."

The merger is contingent on shareholder approval.

Ristretto is offering shareholders $28.25 per share in cash, which represents a 21 percent premium to Williams Scotsman's Wednesday close of $23.36 per share. The deal also includes the assumption of debt, which brings its total worth to $2.2 billion.

The company's stock shot up $4.64 yesterday to close at $28 per share. As part of the agreement, Williams Scotsman has the right to shop for better offers until Aug. 17.

Ristretto officials could not be reached for comment yesterday.

If approved, no layoffs are planned as there is almost no overlap between the companies, officials said, except in Spain. There, regulatory authorities must sign off on the deal.

Combined, the new company would have 4,600 employees and operate in 16 countries, offering products ranging from portable toilets and office trailers to full-size buildings.

Standard & Poor's put Williams Scotsman's credit rating on watch to see if the company receives another offer by Aug. 17.

"The agreement to an alternative proposal from either a strategic or financial buyer could result in a ratings upgrade or downgrade, depending upon how the transaction is financed," wrote credit analyst Betsy Snyder. "Alternatively, if the proposed acquisition by Algeco is completed, Williams Scotsman's rated debt will be refinanced and we will withdraw all ratings."

Analyst Mark D. Hughes at SunTrust Robinson Humphrey in Nashville, Tenn., cut his rating to "neutral" from "buy" after the merger was announced. He said such a downgrade is typical when there is a tentative acquisition. He said the offer price was on the low end of his estimates, and he wouldn't be surprised if shareholders looked to the buyer to sweeten the pot.

"The thinking is, their markets are in a growth phase, why sell out here?" said Hughes, whose firm does business with Williams Scotsman.

Employing nearly 1,950 employees as of Dec. 31, 2006, including 200 in White Marsh, Williams Scotsman bolstered its foray into the global market with recent acquisitions: In August, it acquired Wiron in Spain. In March, the company bought Honolulu-based Hawaii Modular Space - which gave it a presence on all the Hawaiian islands - as well as a sister company in Alaska. And earlier this week, the company opened two offices in Mexico.

The company went public in September 2005, the same year it celebrated its 50th anniversary. It was founded by a road contractor who worked on Interstate 95 and patented the first mobile office box.

"From little things, the business developed into what it is today," Holthaus said.

Williams Scotsman has a fleet of more than 118,000 modular space and storage units that are leased through 100 locations in North America and Spain. Algeco's fleet, which includes portable bathrooms, numbers 175,000.

The deal was unanimously approved and recommended by Williams Scotsman's board of directors. Also, Scotsman Partners LP, Cypress Merchant Banking Partners LP and Cypress Offshore Partners LP, which represent 27 percent of the company's shares, have signed agreements saying they would vote all their shares in favor of the merger.


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