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PODS Purchase Brings $430 Million

Associated Press photo by Chris O'Meara. (File Photo)

The fast-growing Clearwater storage company PODS Inc. is being sold in a transaction that's being signed today, founder Pete Warhurst said.

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By RICHARD MULLINS, The Tampa Tribune

Published: December 20, 2007

What will Pete Warhurst do next?

His friends keep asking. Investors want to know. Pretty much anyone else he meets lately wonders about it.

Wednesday, Warhurst presided over the selling of his second blockbuster success story, the moving and storage company PODS Inc., which he and a few friends started almost on a lark. A Bahrain-based investment company called Arcapita Inc. bought 100 percent of PODS for about $430 million in a deal that closed Wednesday.

For Warhurst, 55, a former firefighter, avid golfer and private pilot, the deal has brought him some peace of mind, and finally some time off. Wednesday evening, Arcapita wired the money to PODS, and Warhurst poured himself a celebratory martini and thought about his next move.

"I'm very much content with the transaction, and I'll only be staying on until they find a replacement for me," Warhurst said. Maybe he'll relax for a year, he said. Maybe not.

"I'm not one to sit still, though, and this is the second company I've built and sold," he said. "All my investors and shareholders have told me, 'When you do something next, you better call me.'"

Philip Doganiero, a board member of PODS who helped arrange its first "angel" investors in 1999, said, "He's going to have a lot of options. From Pete's track record of success, people are going to be knocking down his door."

Warhurst Thinks Big

Warhurst is a tall, ruddy man who drives a Volkswagen sedan and says he's always had a hard time staying put at any one point in life.

He didn't start off his career as an entrepreneur. He started in Largo as a firefighter.

Over 14 years in the fire department, he rose through the ranks and focused on ways to improve the dispatching of 911 calls to police, ambulances and fire stations.

That led to the founding of EAI Systems in Clearwater, a company he and a few colleagues founded that developed computer-aided dispatch systems. In 1993, Bell Atlantic bought the company, and Warhurst soon retired to the golf course - or so he thought.

In a moment of early retirement boredom, Warhurst and a Pinellas County neighbor, Roy Courtney, opened a conventional mini storage unit. Business didn't grow as easily as they had hoped, and both wondered if they could help homeowners get their stuff to the storage site. Sending trucks would be too time consuming and costly, so they wondered about just sending a big, steel box instead. They offered to pick up and stow the box out of sight.

They invented a "Podzilla" machine that's part truck, part forklift to haul the PODS, and in October 1997, they coined the name "Portables," which stuck just long enough for an advertising agency to change in favor of "PODS."

Even as recently as 1999, the company had just 1,600 storage boxes in service.

The growth led Warhurst into a world of franchising, finance and deal-making. If he had a guiding principle, it came from a book he read in the 1970s while an entry-level firefighter, "I'm OK, You're OK," by Thomas Harris. The book's central psychological theme was that people can get along with win-win situations.

"Like most 20-year-olds, I thought I had all the answers," Warhurst recalls. "Reading that book opened my mind. It helped me mature a bit and recognize that there was probably more than one viewpoint."

Whenever a critical deal at PODS came up, he would think of that idea and try to structure a deal around the other person's point of view so they felt like they had succeeded - the antithesis of a predatory deal maker.

First Meeting

Soon after PODS started to grow, he met a little-known Middle Eastern investment company, then called Crescent Capital, and its parent company the First Islamic Investment Bank (later to be called Arcapita). Crescent staff would visit PODS offices every once in a while, mainly to check up on a fast-growing American firm.

"In the early days, they thought I was smoking dope because I was telling them I would double or triple the size of the company in a year," Warhurst said. "After doing just that and doubling the company three or four times, they started to think, hey, maybe I wasn't smoking dope after all."

At one point a few years ago, Warhurst entertained ideas that Crescent would buy 51 percent of the company, but a deal never materialized. Offers to take PODS public were coming fast and furious, and investment bankers were regular visitors at the PODS offices.

Still, Warhurst and his partners stuck to the idea that PODS could become a household name akin to FedEx or UPS - a verb as much as a company brand.

That helped lead PODS to buy a major sponsorship at the PGA, becoming the official moving company of the PGA and getting naming rights to a tournament in Florida.

A big golfer and licensed private pilot, Warhurst would often take his buddies golfing - abroad - throwing a bunch of guys and their clubs into his Swiss-made "Pilatus" turboprop for a weekend of golf in Jamaica.

Warhurst would fly himself to business meetings across the country, yet still answer his cell phone midflight while piloting into a New York City airport.

The Right Deal Happens

Then midsummer this year, PODS shifted course and looked for ways to reward early investors in the company whose money was still tied up in the company's assets.

Warhurst was the second-largest of about 200 private shareholders, though he declines to say just how much of the company he owns. Merrill Lynch is the largest share owner.

PODS hired investment bankers at Morgan Stanley this summer and considered taking the company public through an initial public offering. They considered selling to a strategic partner like UPS or FedEx.

Eventually, PODS settled on an offer from Warhurst's old contacts at Crescent Capital, renamed "Arcapita" in 2005, a relatively smaller and younger investment firm compared with major buyout funds such as The Carlyle Group or Kohlberg Kravis Roberts & Co., though it is growing quickly.

With offices in Bahrain, Atlanta, London and Singapore, Arcapita lists $3.8 billion in assets. Its chairman, Mohammed Abdulaziz Aljomaih, is described in company literature as chairman and president of Aljomaih Holding Co., a corporation with holdings in General Motors Co., Pepsico Inc., Shell and Fiat.

The firm specializes in structuring financial transactions that allow Middle Eastern individuals to invest in foreign companies while also following Islamic law that governs what types of deals Muslims may make, Warhurst said.

Now, Warhurst said, he expects to relax a little, spend time with family.

"I don't have any big schemes or ideas yet," he said. "Right now, I want to work with my daughter and family, look at some investments." The other day, Warhurst and his family spotted a condo they like that had been foreclosed on. With the price at 50 cents on the dollar, they made an offer, though he declined to say exactly where or for how much.

"I'm not going to jump into something right out of the gate," he said. "My first business was technology, with the 911 systems, then I went from high tech to delivering boxes. So there's a broad spectrum of what piques my interest."

In other words, the guy that started one of the most recognizable storage and moving companies will probably keep moving himself.

Reporter Richard Mullins can be reached at (813) 259-7919 or rmullins@tampatrib.com.

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