NCC Group to acquire intellectual property management business of Iron Mountain for $220 million

The proposed transaction is expected to provide the enlarged group with a number of financial benefits.

LONDON: NCC Group plc (LON: NCC) signed an agreement for the proposed acquisition of the Intellectual Property Management business of Iron Mountain Inc. for a cash consideration of $220 million, a news release said.

Intellectual Property Management business of Iron Mountain Inc. comprises substantially all of the assets of Iron Mountain Intellectual Property Management Inc. (IPM) together with certain other assets of affiliates of Iron Mountain exclusively related to the IPM Business.

Creating a Market-Leading Escrow Business

 · IPM is a leading provider of software resilience services to a large and diverse US market – the combination will provide immediate additional scale to NCC’s core software resilience business, making the US region the largest contributor of the division’s revenues and profits.

o IPM reported revenue of $32.9 million (£23.3 million) and EBITDA of $21.6 million (£15.4 million) for the 12 months ended 31 December 2020 (audited).

· The IPM Business has built a market-leading escrow business, serving in excess of 6,000 customers, across the full life-cycle of escrow and verification services as well as across a range of industries.

· IPM has a strong, established team, led by Mr. John Boruvka and Ms. Joy Egerton, which is expected to be retained as part of the Acquisition. Mr. Boruvka, Ms. Egerton and the senior members of the IPM Business team have agreed to continue in their roles following Completion.

· In addition to organic growth across the recurring revenue base of IPM, the proposed Acquisition represents a compelling opportunity for both of NCC’s Assurance and Software Resilience divisions to benefit from revenue synergies across an enlarged, blue chip customer base which spans a majority of the Fortune 500.

· NCC believes that these revenue synergies could be made up of:

o increased penetration of NCC’s verification services into the IPM Business customer base;

o offering the Group’s nascent but fast-growing Escrow-as-a-Service (EaaS) cloud proposition into the IPM Business customer base; and

o satisfying IPM client demands for cyber assurance services.

· The proposed transaction is expected to provide the Enlarged Group with a number of financial benefits and therefore provide further compelling reasons for the combination:

o The Acquisition will be significantly accretive to earnings per share from Completion, even without factoring in revenue synergies¹;

o The Acquisition will be immediately accretive to Group EBITDA margins¹;

o The Group will have an enlarged recurring revenue base, with 80% of IPM’s revenues being recurring (against 60% of NCC’s Software Resilience division’s revenues being recurring);

o The Acquisition will strengthen the Group’s cash generation owing to IPM’s cash conversion ratio² of over 90% for the last three years which, following cash interest and tax deductions, should provide a rapid de-leveraging profile and enable further organic and inorganic investment in the near term;

o Material tax savings which the Directors believe will be created over a 15 year period as a result of intangible assets created by the Acquisition that can be amortised for tax purposes; and

o The provision of material additional scale to the Group – the IPM Business reported revenue of $32.9 million (£23.3 million) and EBITDA of $21.6 million (£15.4 million) for the 12 months ended 31 December 2020 (audited).

· Following the Acquisition, the Software Resilience business will have a greater global presence and is expected to achieve critical mass and international reach that provides the Group with enhanced scale and strategic flexibility

· The enlarged recurring revenue profile and enhanced cash generation will provide the Group with a platform to make further strategic investments, if deemed appropriate and value-accretive

o Such investments could take the form of organic initiatives, inorganic opportunities in line with the Group’s strategy or a complementary mix across both divisions.

Adam Palser, Chief Executive Officer, NCC, commented: “This acquisition will transform NCC Group’s Software Resilience business, making it a market leader, and deliver immediate financial and operational benefits to the whole of the Group. The IPM Business shares many similarities with our own Software Resilience business, including a commitment to providing exemplary service for clients. There are tremendous opportunities to grow the combined business by offering IPM’s blue-chip clients the choice of new services and support.

Following completion, NCC Group will be a stronger and broader business with an even greater ability to support clients in the ceaseless struggle against cyber-crime in all its forms.”

Iron Mountain Incorporated (NYSE: IRM) is the global leader in innovative storage and information management services, storing and protecting billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Founded in 1951 and trusted by more than 225,000 customers worldwide, Iron Mountain helps customers CLIMB HIGHER™ to transform their businesses. Through a range of services including digital transformation, data centers, secure records storage, information management, secure destruction, and art storage and logistics, Iron Mountain helps businesses bring light to their dark data, enabling customers to unlock value and intelligence from their stored digital and physical assets at speed and with security, while helping them meet their environmental goals.

NCC Group exists to make the world safer and more secure. As global experts in cyber security and risk mitigation, NCC Group is trusted by over 14,000 customers worldwide to protect their most critical assets from the ever-changing threat landscape. With the company’s knowledge, experience and global footprint, it is best placed to help organisations assess, develop and manage their cyber resilience posture.

To support its mission, NCC Group continually invests in research and innovation and is passionate about developing the next generation of cyber scientists. With circa 2,000 colleagues in 12 countries, NCC Group has a significant market presence in North America, Europe and the UK, and a rapidly growing footprint in Asia Pacific with offices in Australia, Japan and Singapore.

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12 May, 4:45 pm GMT+1 · Disclaimer

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