Stephenson’s Rental Services Income Fund and a fund managed by EdgeStone Capital Partners last week announced a support agreement under which EdgeStone has agreed to offer to acquire Stephenson’s stock for $6.875 per unit.
The offer will be made by a wholly owned subsidiary of EdgeStone by way of a takeover bid circular that will be mailed to Stephenson’s unitholders on or before June 14.
Stephenson’s board of trustees has unanimously approved the agreement and has unanimously recommended that unitholders tender their units to the offer. Stephenson’s financial advisor Scotia Bank has also agreed that the offer is in the best interests of unitholders.
“The transaction announced today represents the best outcome resulting from the strategic review process that [Stephenson’s] initiated to maximize unitholder value,” said board chairman Warren Walker. “This process included an extensive review of all of our alternatives to maximize unitholder value including, among other things, the undertaking of an extensive auction process.”
The offer represents a premium of about 30 percent to the closing price of the value of the units on January 4, 2007, the day prior to the company’s commencement of the strategic review process.
“As a publicly traded income trust, Stephenson’s was constrained from aggressively pursuing all of the growth opportunities available to us,” said Stephenson’s president and CEO Willie Swisher. “We are excited to be able to partner with EdgeStone, which has the strategic vision, business operating experience, and capital to support our long-term growth strategy.”
“Stephenson’s is the clear market leader in equipment rental in Toronto and surrounding areas, operating an extensive branch network with unparalleled product offerings and service levels, and tremendous customer satisfaction and loyalty,” said Gilbert Palter, chief investment officer and managing partner of Edgestone. “Stephenson’s is very well positioned to benefit from the ongoing trend of renting versus owning construction and related equipment.”
Sandra Bosela, also an EdgeStone partner, added, “We are excited to be acquiring such a well-managed business as Stephenson’s and working with such an experienced and talented management team. We look forward to helping Stephenson’s capitalize on the many growth opportunities it will now be positioned to pursue, as well as continuing to offer the superior product offerings and customer service for which Stephenson’s is known.”
The offer will be open for acceptance for not less than 36 days and will be conditional upon, among other things, more than 66 2/3 percent of the units being validly deposited under the offer and not withdrawn. The offer will also be subject to customary regulatory approvals and the absence of any adverse litigation.
Based in Mississauga, Ontario, Stephenson’s Rental Services is No. 40 on the RER 100, and has 18 branches in the greater Toronto area.