Iron Mountain Inc. (IRM) has planned a prudent entry strategy for the Colombian market. The company recently announced its decision to buy Secure Data Solutions Colombia S.A.S. and G4S Document Delivery S.A.S, which constitute the record management and data protection business of leading Colombia-based security and outsourcing provider, G4S.
Iron Mountain is expected to pay $54.0 million for the acquisition and the transaction is expected to close by the end of September this year. The recent acquisition is Iron Mountain’s second acquisition in Latin America in 2013. In June, the company acquired Brazilian document storage company, Archivum.
Secure Data offers record management solutions, while G4S Document Delivery provides data protection. Secure Data manages approximately 2.4 million cubic feet of records comprising hardcopy documents and data protection tapes, a significant addition to Iron Mountain’s record base.
Secure Data operates through multiple leased facilities across different Colombian cities such as Bogota, Cali, Medellin and Pereira. We believe Iron Mountain’s entry into the Colombian market will boost its topline and profitability over the long term.
Iron Mountain has been pursuing an aggressive acquisition strategy to supplement organic revenues from the storage business. Year-to-date, Iron Mountain has spent approximately $110.0 million for acquiring records storage companies.
Storage is an integral part of Iron Mountain’s revenue structure and contributes nearly 58.5% to its total revenue. The company recorded a 1.9% increase in revenues from storage in the second quarter. The growth in revenues was primarily attributed to 5.6% internal growth in the International business and 1.2% internal growth in North America.
Iron Mountain’s storage division is expected to further gain from acquisitions in fast-growing economies like Colombia, Brazil, Russia, China and India, which will boost its international revenue generation ability and market share going forward.
On the other hand, we are a little concerned about the competition that the company faces from Hertz Global Holdings (HTZ), Pitney Bowes Inc (PBI) and Guidance Software Inc (GUID). Moreover, slower internal growth rate, and currency fluctuation are other factors bothering the company.
Currently, Iron Mountain hasa Zacks Rank #3 (Hold).
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