In a move widely expected due to pressure from its shareholders, Iron Mountain (NYSE:IRM) recently divested its digital archiving business to Autonomy for 380M. Iron Mountain projected revenues are 140M which puts the acquisition price at a multiple of approximately 2.7 times revenue.
Autonomy gets Iron Mountain's archiving, online backup, and e-discovery businesses. This includes the assets Iron Mountain purchased as part of the Mimosa Systems acquisition in February 2010. Iron Mountain struggled with these solutions. Iron Mountain's former CEO, Bob Brennan, had been driving the digital strategy, and was removed in April.
We view this as an opportunistic market consolidation play by Autonomy. With their 375M acquisition of Zantaz in 2007, Autonomy has been in the e-mail archiving market for some time. We've spoken with numerous customers who have been unhappy with Autonomy's archiving solutions. Autonomy seems to be functioning in some ways as a holding company.
Autonomy gets 6000 customers and 6 petabytes of managed data as part of the deal. While we don't have any inside information, our fear is that Autonomy will attempt to simply 'cash cow' the assets they purchased from Iron Mountain. This is consistent with their treatment of the ex-Zantaz product. Development teams will likely be scaled back, and Autonomy will likely milk the maintenance renewal streams for these products as long as possible. Only time will tell.
David Sengupta - In addition to his role as Ferris analyst, David is Chief Architect for Quest Software, and has been a Microsoft Exchange MVP since 1998.