Acquisitions

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Mobile Mini Merger

Purchase Price

Upon completion of the Merger on July 1, 2020, each issued and outstanding share of Mobile Mini Common Stock, par value $0.01 per share, converted to 2.405 shares of WillScot Class A Common Stock, par value $0.0001 per share, and cash in lieu of any fractional shares. The Company issued 106,426,721 shares of Class A Common Stock to Mobile Mini stockholders as consideration for the Merger. The trading price of the Class A Common Stock was $12.53 per share on the closing date. In addition, Mobile Mini stock options converted into WillScot Mobile Mini stock options. The purchase price was determined as follows:


(in thousands, except share and per share data)	July 1, 2020
Mobile Mini Common Stock outstanding	44,252,275
Share conversion ratio	2.405
Common Stock issued	106,426,721
Common Stock per share price as of July 1, 2020	$	12.53
Fair value of shares of WillScot Class A Common Stock issued	$	1,333,527
Cash paid for fractional shares	30
Fair value of Mobile Mini Options converted to WillScot Mobile Mini Options	19,279
Total purchase price	$	1,352,836

The Merger was accounted for using the acquisition method of accounting, and WillScot was considered the accounting acquirer. Under the acquisition method of accounting, the Company assigned the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values at the closing date. The excess of the purchase price over those fair values was recorded as goodwill.

The purchase price for the Merger was assigned to the underlying assets acquired and liabilities assumed based upon their fair values at the date of acquisition, July 1, 2020. The Company recorded the fair values based on independent valuations, discounted cash flow analyses, quoted market prices, contributory asset charges, and estimates made by management. The following table summarizes the July 1, 2020 fair values of the assets acquired and liabilities assumed.

Opening Balance Sheet


(in thousands)	July 1, 2020
Cash and cash equivalents	$	17,203
Trade receivables	87,492
Inventories	8,987
Prepaid expenses and other current assets	13,717
Rental equipment	1,032,672
Property, plant and equipment	160,729
Operating lease assets	92,054
Intangible assets	374,500		(a)
Goodwill identified	937,135
Other non-current assets	2,520
Total identifiable assets acquired	2,727,009
Accounts payable	(29,797)
Accrued expenses	(40,335)
Deferred revenue and customer deposits	(38,846)
Operating lease liabilities	(89,968)
Debt and finance lease liabilities	(897,244)
Deferred tax liabilities	(276,555)
Other long-term liabilities	(1,428)
Total liabilities assumed	(1,374,173)
Purchase Price	$	1,352,836

(a) The initial fair value estimates were calculated using preliminary estimates and assumptions which have been updated in the current reporting period as additional information was obtained during the measurement period. The underlying assets have been adjusted from those previously recorded accordingly. Intangible assets were reduced by approximately $8.0 million from amounts reported at December 31, 2020.

Mobile Mini generated $330.8 million of revenue and $51.9 million of pre-tax income in the six months ended June 30, 2021, which is included in the condensed consolidated financial statements of operations.

The pro forma results presented below give effect to the following as if they occurred on January 1, 2019:


(i)			The Merger;
(ii)			Borrowings under the Company's 2025 Secured Notes and 2020 ABL Facility (both as defined in Note 9) used to repay certain debt in connection with the Merger;
(iii)			Extinguishment of the Mobile Mini revolving credit facility and senior notes assumed in the Merger and immediately repaid;
(iv)			Extinguishment of WillScot's 2017 ABL Facility and WillScot's 2022 Secured Notes (both as defined in Note 9) repaid in connection with the Merger;
(v)			Transaction costs incurred in connection with the Merger; and
(vi)			Elimination of WillScot's non-controlling interest and WillScot's Class B common stock in connection with the Merger. See Note 10 for further details.

The pro forma information is not necessarily indicative of the Company’s results of operations had the Merger been completed on January 1, 2019, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies, synergies, or revenue opportunities that could result from the Merger.

The Company's results of operations for the three and six months ended June 30, 2021 represent the activities of the Company after the Merger. As a result, there were no differences between pro forma results and actual results on a reported basis.

The tables below present unaudited pro forma condensed combined statements of operations information for the three and six months ended June 30, 2020:


(in thousands)	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
WillScot revenues	$	256,862	$	512,683
Mobile Mini revenues	133,663		284,240
Pro forma revenues	$	390,525	$	796,923

WillScot Mobile Mini (loss) income before income tax	$	(14,415)	$	78,030	(a)
Mobile Mini income before income tax	22,967		37,874
Pro forma income before income tax	8,552		115,904
Pro forma adjustments to combined income before income tax:
Elimination of Merger transaction costs	3,198		27,849		(b)
Impact of fair value mark-ups on rental fleet depreciation	(1,167)		(2,334)		(c)
Other depreciation expense and intangible asset amortization	(5,669)		(11,338)		(d)
Interest expense	(3,549)		(6,113)		(e)
Elimination of Mobile Mini interest expense	7,210		15,922		(f)
Pro forma income before income tax	8,575		139,890
Income tax expense	9,737		23,244		(g)
Pro forma net (loss) income	$	(1,162)	$	116,646


(a)			Excludes impact of non-controlling interest which was eliminated as part of the Sapphire Exchange. See Note 10.
(b)			Eliminates discrete transaction costs incurred as a result of the Mobile Mini Merger.
(c)			Depreciation on rental equipment and property, plant and equipment were adjusted for the determination of the fair value of equipment acquired in the Mobile Mini Merger.
(d)			Represents the differential in other depreciation and amortization expense related to the fair value purchase accounting adjustments as a result of the Merger, principally the amortization of the Mobile Mini customer relationship valued at $209,000 with a 13-year life.
(e)			In connection with the Merger, the Company entered into a new ABL Facility and drew $1.47 billion at close with an estimated interest rate of 2.046%, issued the 2025 Secured Notes at 6.125%, repaid the 2022 Secured Notes and repaid the 2017 ABL Facility. Interest and amortization of deferred financing fees for the 2020 ABL Facility and the 2025 Secured Notes has been included offset by the removal of interest and amortization of deferred financing fees attributable to the 2022 Secured Notes and the 2017 ABL Facility. See Note 9 for definitions of terms.
(f)			Interest and amortization of deferred financing fees on the senior notes and line of credit maintained by Mobile Mini which were assumed at acquisition and repaid immediately using proceeds from the 2020 ABL Facility and 2025 Secured Notes was eliminated. See Note 9 for definition of terms.
(g)			Reflects the recorded income tax provision plus the adjustment to recognize the income tax impacts of the unaudited pro forma adjustments for which a tax expense is recognized using a US federal and state statutory tax rate of 25.5%. This rate may vary from the effective tax rates of the historical and combined businesses. In addition, the three and six months ended June 30, 2020 included an adjustment of $2.7 million to eliminate the reversal of valuation allowance as a result of reassessment of the realizability of deferred tax assets as a result of the Merger.

Transaction and Integration Costs

The Company recorded $1.6 million in transaction costs related to the Merger during the three months ended June 30, 2020, and $0.8 million and $11.0 million in transaction costs related to the Merger in the six months ended June 30, 2021 and 2020, respectively. The Company also recorded $7.6 million and $15.0 million in integration costs related to the Merger within selling, general and administrative ("SG&A") expense during the three and six months ended June 30, 2021, respectively.