Algeco Scotsman Signs Agreement to Combine With Target Logistics

Strategic Global Remote Accommodation Expansion


BALTIMORE, MD--(Marketwire - Feb 12, 2013) -  Algeco Scotsman ("AS" or "Algeco"), a leading global business services company focused on modular space and secure storage solutions, today announced it has signed an agreement to acquire Target Logistics Management LLC ("Target Logistics" or "Target"), a leading provider of full-service remote workforce accommodation solutions in the United States. The transaction is subject to certain customary closing conditions and is expected to be completed by the end of February 2013.

The transaction further solidifies Algeco Scotsman's position as the leading modular space business services provider and specifically facilitates Algeco's continued strategic expansion in the highly attractive global remote accommodation segment. The combination establishes Algeco as a leading global provider of managed and leased remote accommodations with a portfolio in excess of 11,000 beds primarily in the high growth US, Canadian, Australian and Latin American energy, mining and resources and infrastructure related-markets. Following this acquisition, Target will become a truly global provider of full service, turnkey remote accommodation solutions. Brian Lash, Target Founder and Chief Executive Officer, will continue to lead Target and will be tasked to expand the business utilizing Algeco's global footprint.

"This transaction represents a highly strategic combination for both Algeco Scotsman and Target Logistics," stated Algeco Scotsman's Chief Executive Officer and President Jean-Marc Germain. "The merger of Target Logistics' world class turnkey remote accommodation offering with AS' global footprint and expertise greatly enhances growth opportunities for the organization and I am delighted that Brian Lash and his executive team have agreed to join us at Algeco." 

The total consideration for the transaction is up to approximately $625 million based on Target's financial projections. Of the total consideration, $275 million is payable at closing and approximately $350 million is deferred and linked to Target's expected strong performance over multiple years. The total closing consideration of $275 million is comprised of approximately $86 million in cash, $86 million of Algeco stock and $103 million of assumed indebtedness and working capital. The cash consideration will be funded by existing facilities available to Algeco and the deferred consideration is payable principally in Algeco stock. 

The total potential transaction consideration represents approximately 11.0x trailing unaudited EBITDA for the fiscal year ended December 31, 2012 and an implied forward EBITDA multiple of less than 9.0x. The valuation of the stock consideration for the transaction implies an Algeco enterprise value of approximately $6.0 billion.

Historically the remote accommodation end-market has been the fastest growing and highest return on investment business segment in the Algeco portfolio. The financial plan for the combined remote accommodation business forecasts continued double-digit top-line growth and doubling the current bed portfolio over the next three to five years. The combination with Algeco provides Target with access to the financial capability to execute its significant pipeline of growth opportunities given Algeco's excess availability of over $320 million under its $1,200 million asset-based revolving credit facility following the transaction. Additionally, the transaction structure, funded primarily through equity issuance, is deleveraging for the Algeco group capital structure, while allowing Algeco shareholders to participate in the growth prospects for the combined group on an accretive basis.

Target Logistics, headquartered in Boston, Massachusetts with operational headquarters remaining in The Woodlands area of Greater Houston, is a leading supplier of turn-key remote workforce accommodation solutions to the oil and gas and related infrastructure sectors in the United States. The company provides full support services that include housing, infrastructure design and construction, catering, facility maintenance, housekeeping, utilities, security, transportation and logistics. Target Logistics operates 16 facilities in North Dakota, Arizona, Texas and Mexico comprising over 5,000 beds. For the financial year ended December 31, 2012 Target Logistics generated unaudited, adjusted EBITDA of $57 million.

"We see continued high growth potential for our remote workforce accommodation solutions globally and we believe the acquisition of Target Logistics and its high quality full-service product offering will help us accelerate our expansion in this important product end market," said Jean-Marc Germain.

"We are delighted to join forces with a company of Algeco Scotsman's heritage and global reach," said Brian Lash, Chief Executive Officer of Target Logistics. "Together, we have an enhanced opportunity to expand our business globally to better serve our customer needs."

The Target Logistics team of over 400 employees will continue to operate under its current brand, and the existing Target Logistics management team will remain in place.

About Algeco Scotsman

Algeco Scotsman is a leading global business services provider focused on modular space and secure portable storage solutions. Operating as Williams Scotsman in North America, Algeco in Continental Europe, Elliott in the United Kingdom, Eurobras in Brazil, Ausco in Australia, and Portacom in New Zealand, the company manages a fleet of more than 310,000 units, with operations in 37 countries including Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, Finland, France, Germany, Hungary, Italy, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine, the United Arab Emirates, the United Kingdom, and the United States.

Cautionary Notice Regarding Forward Looking Statements

This press release contains forward-looking statements, which reflect Algeco's expectations regarding its future operational and financial performance. Although the forward-looking statements contained in this press release reflect management's current beliefs based upon information currently available to management and upon assumptions which management believes to be reasonable, actual results may differ materially from those stated in or implied by these forward-looking statements. A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Except as required by law, Algeco undertakes no obligation, and specifically declines any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.