Why Iron Mountain (IRM) Is Buying ITRenew For $725 Million In Cash

By Annie Baker ● Dec 12, 2021
  • Leading information management company Iron Mountain Incorporated (NYSE: IRM) announced it has entered into a definitive agreement to buy ITRenew. These are the details.

Leading information management company Iron Mountain Incorporated (NYSE: IRM) announced it has entered into a definitive agreement to buy ITRenew, a global leader in mission-critical data center lifecycle management solutions. Upon the deal closing, Iron Mountain will buy 80% of the outstanding shares of ITRenew on a cash- and debt-free basis for approximately $725 million in cash with the remaining 20% acquired within 3 years of close for a minimum enterprise value of $925 million. The previous investor ZMC, a leading private equity firm focused on technology, media, and communications investments, will exit its position as part of this transaction.

Launched in 2000, ITRenew principally serves hyperscalers, the fastest-growing segment of the global IT Asset Disposition market, focusing on maximizing the lifetime value of data center servers through sustainable asset disposition, recycling, and remarketing solutions. And with its comprehensive portfolio of best-in-class decommissioning and data security services, ITRenew enables companies to securely protect their data, maximize the value of their hardware assets, and have a positive impact on the environment through IT asset circularity. As of September 30, 2021, ITRenew had trailing twelve-month revenue in excess of $415 million and has a two-year compounded annual growth rate of approximately 16%.

Following the closing of the deal, ITRenew will form the platform for Iron Mountain’s Global IT Asset Lifecycle Management business. And IT Asset Lifecycle Management refers to the deployment, management, and ultimate decommissioning and disposition of technology assets at the end of their useful life. The combination significantly enhances the company’s ability to provide end-to-end services to the hyperscale, corporate data center, and corporate end-user device segments.

The company management estimates the IT Asset Disposition total addressable market is $30 billion and growing 11% compounded annually over the next 5 years. And ITRenew principally operates in the hyperscale segment of the market, which is the fastest-growing segment and is forecasted to grow in the high teens compounded annually over the next 5 years.

Iron Mountain is going to build on this strategic platform and accelerate enterprise growth by utilizing its global customer base and best-in-class data security and logistics capabilities. And ITRenew’s hyper-scale focus is highly complementary to Iron Mountain’s existing data center business. And ITRenew’s innovative circular economy models help companies achieve critical sustainability benefits. 

Iron Mountain’s Data Centers are powered by 100% renewable energy. And together with ITRenew, the company sees significant opportunities to enhance the value of its Environmental, Social, and Governance offerings. 

Iron Mountain anticipates the deal will be immediately accretive to 2022 AFFO and positively enhance the company’s long-term revenue and cash flow growth. And the company has secured financing commitments and expects to fund the transaction through a combination of new debt and borrowing capacity under its current revolver with a modest impact on leverage in the short term. The company expects to de-lever quickly and exit 2022 within its target leverage range.

Under the terms of the deal, Iron Mountain will acquire at closing 80% of the shares of ITRenew for approximately $725 million in cash. And the remaining 20% will be acquired in cash within 3 years from close with a minimum payment of $200 million and the final amount subject to the performance of the business. The deal implies a minimum enterprise value of $925 million, which corresponds to a purchase multiple of approximately 12x based on trailing twelve-month EBITDA as of September 30, 2021.

The deal is expected to close in the first quarter of 2022, subject to regulatory approval and other customary closing conditions.

KEY QUOTES:

“This strategic transaction marks an important step in advancing Iron Mountain’s position in Asset Lifecycle Management and accelerating our enterprise growth trajectory. ITRenew complements our fast-growing IT Asset Lifecycle Management and Data Center businesses bringing capabilities to serve some of the largest and most innovative companies in the world.”

— William Meaney, Chief Executive Officer of Iron Mountain

“With ITRenew, we become a key player in addressing the global challenge of reducing the environmental impact of IT and data center operations, furthering our commitment to ESG.”

— Deirdre Evens, Iron Mountain Executive Vice President, Asset Lifecycle Management

“We are excited to enter this agreement with Iron Mountain, as the combination will provide us with the scale and global footprint to achieve our vision and deliver long-term growth.” 

— Aidin Aghamiri, Chief Executive Officer of ITRenew