Data management giant Iron Mountain will acquire electronics reuse and recycling company Regency Technologies for $200 million.
The Portsmouth, N.H.-based publicly traded giant announced today (Nov. 2) it has signed an agreement to acquire Regency, an ITAD services provider with eight locations across the U.S. The deal may well be the largest e-scrap industry acquisition this year to date.
The acquisition will sharply increase the size of Iron Mountain’s Asset Lifecycle Management (ALM) business, which includes ITAD and data center decommissioning. It will also add extensive capabilities for commodities recovery from end-of-life electronics that Iron Mountain doesn’t currently have in house.
“We are excited to add Regency’s extensive experience of over 20 years, during which we’ve successfully served enterprises, government entities and retailers, to Iron Mountain’s already impressive customer portfolio, which includes 95% of the Fortune 1000,” Jim Levine, CEO of Regency Technologies, stated in the press release.
“By integrating our presence, remarketing expertise, and recycling operations into Iron Mountain’s ALM business,” he continued, “we’ll be uniting a broad array of capabilities, further solidifying our leadership in the market.”
Regency itself has grown in recent years through an acquisition and now has eight locations that, in aggregate, process over 50,000 metric tons of material and resell over 2 million electronics annually. In 2019, Regency acquired Global Electric Electronic Processing (GEEP) USA, a deal that resulted in Regency locations in Michigan and North Carolina.
A peek at the financials
Regency Technologies is currently owned by Reserve Management Group (RMG), which is a family of ferrous, non-ferrous and e-scrap metal recycling businesses, as well as materials handling and equipment sales businesses, co-headquartered in Chicago and Stow, Ohio, near Cleveland.
Iron Mountain agreed to pay a purchase price of $200 million for Regency. That will include a $125 million payment at close of the deal and another $75 million due in 2025. The sum is about 7.5 times Regency’s earnings before interest, taxes, depreciation and amortization (EBITDA), according to the release. Regency’s annual revenue is over $100 million.
During a Nov. 2 conference call with investors, Barry Hytinen, the company’s chief financial officer, described Regency as a “low mid-20s of an EBITDA margin business,” with opportunities to expand the profit margin.
The acquisition agreement also includes a potential performance-based earn-out. If the Regency operations meet the agreed-upon performance standards, then the additional money would be paid in 2027.
What Regency brings
“The long-term customer relationships that Regency brings to Iron Mountain are an excellent strategic fit to our ALM business. Regency will add operational scale as we continue our growth journey in this fast-growing sector,” William Meaney, president and CEO of Iron Mountain, said during today’s conference call.
Iron Mountain’s ALM business is largely the product of the company’s $925 million acquisition of ITRenew in January 2022. The Regency acquisition is expected to result in a notable jump in revenue. During the third quarter of 2023, Iron Mountain’s ALM business tallied about $42 million in revenue.
With its industrial-scale shredding and separation systems, Regency also brings end-of-life recycling capacity to Iron Mountain.
“They do a lot more on the downstream processing, which quite frankly, will not only allow us to harvest more value from the products that we’re recycling from our customers, but it will also allow us to kind of expand, improve or accelerate our expansion into the OEM channels that we mentioned before,” Meaney said during the call.
Meaney also noted that Regency has more capabilities to refurbish and resell laptops than Iron Mountain does.
“They built up not only more expertise in refurbishing tablets and laptops than we have, but they also have a very nice e-commerce platform where they can actually resell those,” he said. As a result, the Regency acquisition will accelerate signing of additional contracts with Iron Mountain’s existing OEM customers.
“I think their capability will be a nice complementary fit to the contracts that we had already signed,” he said.
In the call, Hytinen noted they expect the deal to close late this year or early in 2024. The deal is subject to customary closing conditions.