American data storage group, Iron Mountain has finally persisted in its five month pursuit of Recall Holdings (REC), the spin-off from Brambles, in the shape of a $2.5 billion scrip or cash bid.
Iron Mountain first bid for Recall last December in a deal worth $2.2 billion – the latest is worth $2.5 billion, helped by the slide in the value of the Aussie dollar in the past five months.
The new offer was announced to the New York Stock Exchange overnight, and will be released to the ASX first thing this morning.
The bid will be done through a proposed scheme of arrangement and will see Recall shareholders receive 0.1722 Iron Mountain shares for each Recall share.
Iron Mountain shares were trading at US$37.14 (more than A$46) overnight Tuesday night.
The share offer values Recall at about $A7.86 a share, or 3.1% aboveTuesday’s closing price.
Shareholders can choose to receive $A8.50 a share in cash, with the total payout capped at $A225 million, Iron Mountain said. That will force most shareholders to take the share component of the offer.
The deal is contingent on Iron Mountain and Recall conducting confirmatory due diligence and other conditions.
"The revised offer for Recall reflects the strengthening of the U.S. dollar and other favourable changes since our last proposal, particularly regarding transaction-related tax assumptions," Iron Mountain CEO William Meaney said in the statement.
"Our proposed transaction with Recall represents a compelling value proposition that we expect will generate significant synergies and be highly accretive after year one for both companies’ shareholders."
"In addition, Recall shareholders will directly benefit from the upside in future performance of the combined company and from any share appreciation of Iron Mountain common stock if the merger occurs.
"This proposed transaction represents compelling value for Recall shareholders, and we look forward to reaching a definitive agreement quickly."
Recall CEO, Doug Pertz said the company was pleased to have reached agreement with Iron Mountain.
"Recall is pleased to have reached an agreement with Iron Mountain on the key commercial terms of a transaction that we believe is in the best interest of the company, our shareholders and our customers," he said.
"The combined industry expertise of Recall and Iron Mountain will benefit customers and employees of both organizations, bringing the potential to produce material improvements in operations, enhanced quality of service and new product innovation for the information management industry."
Mr Meaney said the combined company’s "broader footprint, stronger infrastructure and increased economies of scale" would allow the merged company to better serve its customers around the globe.
"In addition, both companies’ shareholders stand to benefit from potential significant synergies and tax synergies to be achieved by way of REIT conversion, currently estimated at $125 million to $140 million," he said.
The deal will see Iron Mountain to establish a secondary listing on the ASX to allow Recall shareholders to trade Iron Mountain shares locally, if the Scheme of Arrangement is approved and implemented.
