Recall Said to Seek Revised Terms in Iron Mountain Takeover

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Recall Holdings Ltd. is seeking improved terms from Iron Mountain Inc., after a fall in the U.S. storage company’s shares cut the value of its A$2.5 billion ($1.9 billion) offer, people with knowledge of the matter said.

While talks are under way about a potential revision, it’s unclear if Iron Mountain will agree to sweeten the terms, one of the people said, asking not to be identified as the details are private. Recall may walk away if Boston-based Iron Mountain doesn’t change its offer, one person said.

Iron Mountain shares have fallen 5.4 percent in New York trading from their last close before the company announced the deal April 28. It offered investors 0.1722 of an Iron Mountain share for each Recall share, equivalent to about A$7.86 at the time the takeover was announced, and the option of accepting A$8.50 in cash for the first 5,000 share in each holding.

“This is such a tremendous deal for Iron Mountain: It’s transformational, is hugely accretive and gives them scale,” Vinit Bodas, chief investment officer of Deccan Value Investors, said by phone. “So we are very disappointed that the share price has gone the other way.”

Deccan Value believes Recall should be valued at A$8.50 to A$9 a share, Bodas said. The Greenwich, Connecticut-based asset manager owns about 14 percent of Recall, he said.

Shares of Recall fell 2.5 percent to A$7.10 at the close of Sydney trading. Representatives for Iron Mountain and Recall declined to comment.

Revising Terms

Recall shares may fall to A$5.50 if the deal collapses, said Lee Mitchell, co-founder of Smart Karma in Singapore. Varying the terms may also complicate the transaction for Iron Mountain, he said.

“It is hard to imagine Iron Mountain being very receptive to this when it appeared to be difficult to get an agreement in the first place,” Mitchell said today by phone. “It looks like it’s in trouble and I don’t think Iron Mountain have much room to move. If they revise terms, Iron Mountain’s share price may come under even more pressure, further diluting the terms.”

Recall rejected an initial A$2.2 billion takeover offer from Iron Mountain in December, saying the price was too low when savings from the combination were taken into account. Atlanta-based Recall, spun off in 2013 from Sydney-based cargo-pallet supplier Brambles Ltd., said in an April 28 statement that the new offer “is in the best interest of the company, our shareholders and our customers.”

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