Iron Mountain Inc. (IRM) appears to be on an acquisition spree. It recently acquired Cornerstone Records Management to expand its records management business for a cash consideration of $191 million.
Cornerstone is a privately held company which specializes in document management, storage, document shredding and data protection services and manages over 11 million cubic feet of physical documents.
This acquisition is expected to have a limited impact on Iron Mountain’s 2013 results. However, it is expected to add around $50 million to $55 million in revenues and $20 million in adjusted operating income prior to depreciation and amortization next year. The acquisition will also add small and midsized companies to Iron Mountain’s client base.
Iron Mountain has an aggressive acquisition strategy to supplement organic growth in storage revenues. Year to date, the company has spent almost $100.0 million on acquisitions in countries such as Peru, Brazil and Colombia.
The company has not only gained new customers from these acquisitions but has also been able to expand its operations in international regions such as Greece, China, Hong Kong, Singapore, Switzerland and Turkey.
Moreover, this strategy is helping the company to increase its presence in emerging markets, such as Brazil and Colombia. We expect the company to continue pursuing strategic acquisitions in emerging markets like Brazil, Russia, China and India, which will boost its international revenues, going forward.
On the other hand, we remained 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 fluctuations are other concerns.
Currently, Iron Mountain has a Zacks Rank #3 (Hold).