Information management company Iron Mountain Incorporated (IRM) recently revealed that the company has entered into a definitive agreement to acquire data center lifecycle management solutions provider ITRenew for $925 million. The deal is likely to close in the first quarter of 2022.
Following the news, shares of the company gained 2.4% to close at $48.42 on Friday.
Details of the Transaction
The terms of the agreement state that Iron Mountain will initially acquire 80% of the shares of ITRenew for roughly $725 million in cash. The remaining 20% will be acquired by paying a consideration of $200 million in cash within three years.
Strategic Impact
The buyout will enable Iron Mountain to gain a strong foothold in the growing IT Asset Disposition space. Further, ITRenew’s expertise in the space will allow Iron Mountain to scale its data center business.
Financially, Iron Mountain expects the deal to be accretive to its 2022 AFFO while increasing its revenue and cash flow in the longer term.
Management Commentary
CEO of Iron Mountain, William Meaney said, “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.”
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Price Target
Three weeks ago, Evercore ISI analyst Sheila McGrath reiterated a Buy rating on the stock with a price target of $53, which implies upside potential of 9.5% from current levels.
Consensus among analysts is a Strong Buy based on 4 Buys and 1 Hold. The average Iron Mountain price target of $51.20 implies upside potential of 5.7% from current levels.
Smart Score
Iron Mountain scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 65.4% over the past year.
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