Willscot: Death of a Roll-up
The FTC has effectively killed WSC's business model. WSC is now a former growth company with a potentially significant festering accounting issue, low growth prospects and a lot of maturing debt.
On September 18th Willscot (WSC) announced that the acquisition of McGrath RentCorp (MGRC) has been effectively blocked by the FTC.
We believe termination of the merger is a serious blow to Willscot, essentially killing the company’s roll-up growth model. Without its raison d’etre as an industry consolidation platform, investors will reevaluate WSC as a stand-alone operating entity, which we expect to cast a long, dark cloud over the company.
We believe Willscot has a host of idiosyncratic and competitive issues that amplify the moderating industry demand outlook to make its financial future grim.
The Full Report is Available Here:
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This report represents the opinions of Keith Dalrymple and Dalrymple Finance on Willscot Mobile Mini. It is an opinion piece and should not be taken as investment advice of any kind. This is not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
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Great materials in all of three articles on WSC!
The last report was written after management announced their intend to repurchase 1B worth of shares (I understand that this was partly to placate to the investors and show everything is normal). However, since then, there has been a small shift.
In specific, BlackRock just recently, three days after your last report on Sep 30th, bought $300M worth of shares only for the SEC report to become available only last week. I was wondering how this might affect your short position? Are you still shorting WSC or would you be taking a pause to see how things would be moving.
Do you think 300M cash injection would be enough for the management to cover the 170M termination fee of the McGrath's failed merger and focus on decreasing debt/ updating their inventory. Or the pit WSC has dug is too deep and the damage is beyond repair.