Livermore, Calif.-based McGrath RentCorp, a rental provider of modular buildings for classroom and office space, and electronic test equipment, last week announced that it has agreed to acquire privately held Adler Tank Rentals for approximately $90 million. The purchase price will consist of approximately $89 million in cash and 40,000 shares of McGrath RentCorp common stock, and is expected to close before the end of 2008.
Adler Tank Rentals is a Newark, N.J.-based rental provider of liquid containment solutions for storage of hazardous and non-hazardous liquids. Founded in 1998, Adler is the fifth-largest North American provider of such rental products, operating from branches that serve the Northeast, Mid-Atlantic, Midwest and Texas. Adler rents temporary storage tanks used in energy, environmental, industrial and construction applications.
“With this strategic acquisition, we immediately add a significant new rental business segment to the increasingly diversified McGrath RentCorp portfolio of business to business rental products,” said Dennis Kakures, president and CEO of McGrath RentCorp. “Adler Tank Rentals has an attractive combination of long-lived assets, a young rental fleet, innovative product and a commitment to exceptional customer service that fits well with our rental business focus. We believe that we can build on the success already achieved by the Adler team by leveraging our systems and support functions and by providing capital for long term growth.
“We believe Adler Tank Rentals is a unique operator in a growing specialty rental services market with compelling return on capital. We are very fortunate that Steve Adler, the founder, has agreed to lead the enterprise going forward. Steve has built a great business with a talented and highly dedicated team.”
McGrath RentCorp intends to finance the transaction from its $350 million revolving line of credit. Upon completion of the acquisition, the company is expected to have capacity to borrow an additional $80 million under its lines of credit. McGrath RentCorp currently expects the transaction to be accretive to earnings in 2009. The transaction is subject to customary closing conditions, including receipt of regulatory approval and consents from third parties.
Oppenheimer & Co. is an advisor to Adler Tank Rentals on the transaction.
Founded in 1979, McGrath RentCorp is a diversified business to business rental company. Under the trade name Mobile Modular Management Corp., it rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs in California, Texas, Florida, North Carolina and Georgia. The company’s TRS-RenTelco division rents and sells electronic test equipment and is a rental provider of general purpose and communications test equipment in the Americas. In 2008, under the trade name TRS-Environmental, the company entered the environmental test equipment rental business serving the Americas.