Iron Mountain, Inc. to acquire Rival Leahy Corp. for 1.90 times revenue

Weekly Corporate Growth Report, Nov 8, 1999

The Deal: Iron Mountain, Inc., one of the world's largest storage companies for medical and business records, has agreed to purchase its top competitor, Pierce Leahy Corp., for $515 million in stock, plus the assumption of $570 in debt. Together the companies would have 110,000 customers and control 40% of the U.S. records-management market. Iron Mountain said that it would trade 1.1 of its shares for each common share of Pierce Leahy. The deal values Pierce Leahy shares at $29 each. Pierce Leahy shares rose 18.75 cents to $26 in composite trading on the New York Stock Exchange, while Iron Mountain shares dropped 13%, or $3.8125, to $26.625.

Discussion: Pierce Leahy has nearly 190 record management facilities in the U.S. and offers storage for all major media, including paper, computer tapes, optical disks, microfilm, videotapes and X-rays. Pierce Leahy is one of the two largest archive record management companies in North America.

Pierce Leahy is being bought by its rival, Iron Mountain. Iron Mountain's chairman, Richard Reese, said he expects "very minimal layoffs" as a result of the merger. Overall, the company expects to realize $15 million in annualized cost savings in two to three years. Neither company expects opposition from federal antitrust regulators because many closely held competitors remain. The deal is expected to be finalized in February. The Pierce family, which owns 40% of Pierce Leahy outstanding shares, has agreed to vote for the deal, as have insiders representing 25% of Iron Mountain's shares outstanding. Former Pierce Leahy shareholders would own 35% of the new company, which will be called Iron Mountain.