The takeover of ASX-listed Recall Holdings appears one step closer after its foreign suitor responded to competition concerns.
US information management provider Iron Mountain has promised the Australian Competition and Consumer Commission (ACCC) that it will offload part of its Australian operations if its $3.4 billion takeover is approved.
According to the court-enforceable undertaking, Iron Mountain would sell its entire Australian arm, except its local records management customers in the Northern Territory and its data management business.
Iron Mountain has operations in every Australian state and territory, while Recall is represented everywhere except the Northern Territory.
Iron Mountain and Recall signed their deal in June 2015 – but in November, the ACCC said the takeover might breach competition rules, which prohibit acquisitions that substantially reduce competition in a market.
The ACCC estimated that the merged entity would control 59-71 percent of the physical document management services market. Such dominance “would be likely to lead to an increase in prices and/or a reduction in service,” according to the regulator.
The ACCC has invited interested parties to comment on Iron Mountain’s proposal, with submissions due 21 March. The regulator expects to announce its decision on 31 March.
Competition authorities in the US, the UK and Canada are also looking into the deal, which is expected to complete around 2 May.
Iron Mountain is headquartered in Boston and has more than 1,100 facilities in 37 countries.
Recall is based in Sydney and also has operations in North America, South America, Europe and Asia-Pacific.
The company reported year-on-year growth in its most recent financial results, covering the six months to 31 December 2015.
Revenue rose 6.7 percent to $450.9 million, while net profit rose 7.3 percent to $38.3 million.