This article was updated from June 8 to correct the name of Iron Mountain President and CEO William Meaney.
NEW YORK (The Deal) -- Boston's Iron Mountain (IRM) has sweetened its bid for Australia's Recall Holdings Ltd. for a second time, adding cash to give the offer an enterprise value of A$3.4 billion (or $2.6 billion). That price remains below the companies' original agreement, however, following a sharp slide in the bidder's shares.
Under the terms of the revised deal, Iron Mountain will offer 0.1722 of a share and 50 cents in cash for each Recall share. The offer equates to $6.12 a share, or A$2.5 billion for the target's equity, based on Iron Mountain's closing price of $32.65 on Friday, June 5.
Iron Mountain, a documents-storage business, was cajoled back to the negotiating table after its shares slid almost 10% since the end of April when it reached an agreement to buy Recall. Despite the added cash, the new offer remains lower than the implied value of Iron Mountain's earlier bid. That offer of 0.1722 of a share had been worth $6.24 per Recall share based on Iron Mountain's April 28 closing price of $36.24.
Iron Mountain made an initial bid of A$7 per share or A$2.2 billion for Recall in December of last year. That offer was rejected as too low.
"Our due diligence identified the opportunity to for increased synergies and savings ... which allows us to distribute a portion of those savings to Recall shareholders," Iron Mountain's President and CEO William Meaney, said Monday in a statement that didn't mention his company's slide in valuation.
Iron Mountain said it expected total net synergies from the combination to be about $155 million, up from its earlier estimate of $125 million to $140 million. That new estimate is still well below the $250 million of synergies that Recall claimed to have identified when it rejected Iron Mountain's bid at the end of 2014.
Recall's board said on Monday that it unanimously backed the new offer.
The deal would leave investors in the Sydney-listed group with 21% of Iron Mountain. Recall, which is headquartered in Atlanta, Ga., was spun out of Brambles Ltd., the world's largest supplier of wooden pallets, in December 2013, after its Australian parent abandoned an auction when bids failed to reach its valuation of about $2 billion.
Under the terms of the latest offer, Recall shareholders will have the option of taking A$8.50 (or $6.49) cash for each of their shares, though the cash portion will be limited to A$225 million with preferential treatment given to the first 5,000 shares held by each Recall investor.
Iron Mountain is taking financial advice from Goldman Sachs Group Inc. Its legal counsel is being provided by a Weil, Gotshal & Manges LLP team, including Michael Aiello, Frank Martire, Adam Dilluvio, Frank Adams, Steven Newborn, Laura Wilkinson, Alexis Brown-Reilly and Kristin Sanford as well as Minter Ellison.
Recall is receiving financial advice from Bank of America Merrill Lynch's Kevin Brunner, Kevin Knupp, Grant Chamberlain, Greg Mitsch and Gautam Cha. It is also taking advice from UBS AG's Australian branch. Recall's law firms are Sidley Austin LLP in the U.S. and Allens in Australia. Herbert Smith Freehills is providing legal counsel to Recall's board of directors.