(Reuters) — Australia-listed data protection services provider Recall Holdings Ltd (REC.AX) is seeking to renegotiate a $2.2 billion deal to be acquired by document and data storage services company Iron Mountain Inc (IRM.N), according to people familiar with the matter.
Under the deal reached with Boston-based Iron Mountain in April, Recall shareholders can get either 0.1722 of an Iron Mountain share, or A$8.50 in cash, for every Recall share held. The offer is available for a maximum of 5,000 shares per investor in Recall, headquartered in Atlanta, Georgia.
But following a drop in Iron Mountain’s share price, Recall is now asking for a “collar” mechanism to offer it price protection and to keep the deal at or above the price of A$8.50 per share, the people said on Wednesday.
Iron Mountain shares closed at $34.28 in New York on Wednesday, down 5.4 percent since April 27, the day before it announced the deal with Recall. At this level, the stock offer values Recall at A$7.6 per share.
Recall may terminate the deal with Iron Mountain if a new agreement cannot be reached, the people said.
The sources asked not to be identified because the matter is not public.
A Recall spokeswoman said due diligence is in its final stages, and the company continues to think the deal is good value for shareholders. “Discussions are continuing. If there’s a material development there will be disclosure as per the normal course,” she said.
A spokesman for Iron Mountain did not respond to a request for comment.
Recall shares closed down 2.5 percent in Sydney amid uncertainty about whether the deal will proceed, while the broader market fell 1.4 percent.
Iron Mountain’s share price has dropped on investors’ worries about the company’s physical storage business in light of advances in the online storage of information.
Earlier this week, Jefferies analysts cut their rating on Iron Mountain’s stock from “hold” to “underperform,” citing steepening declines in paper usage and the increasing availability of cheaper cloud storage solutions.
Last December, Recall rejected a A$7 per share offer from Iron Mountain as too low. Recall had been previously spun off from Australian logistics giant Brambles Ltd (BXB.AX).
Iron Mountain’s offer comes as the global document management industry undergoes significant consolidation. Recall held talks in the past to buy Canadian rival Shred-It.
(Additional reporting by Byron Kaye in SYDNEY; Editing by Leslie Adler and Kenneth Maxwell)