Recall suitor Iron Mountain pays $US45 million to settle with regulator

Brambles spun Recall Holdings last year.Iron Mountain, the Boston-based paper storage giant stalking Recall  Holdings, has paid $US44.5 million to settle a claim that it overcharged US government customers.
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In the lead-up to Christmas, Iron Mountain and its subsidiary Iron Mountain Information Management LLC settled allegations made under the False Claims Act that the company failed to meet its contractual obligations to US government entities.

The US Department of Justice said that Iron Mountain had provided the relevant entities with record storage services from 2001 to 2014 through General Services Administration contracts.

During this time Iron Mountain was alleged to have failed to “provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts”.

Iron Mountain has maintained a deferred revenue liability based on estimates of the GSA pricing adjustment and said there would be no material impact on its fourth quarter result.

The case was filed in the Eastern District of California under whistleblower provisions that allow private parties to file suit on behalf of the United States for false claims and receive part of the recovery.

The lawsuit was brought by former Iron Mountain employee Brent Stanley and another former worker in the records management industry, Patrick McKillop.

Mr Stanley and Mr McKillop will share $US8 million of the settlement.

Iron Mountain, the global leader in information storage and management, made a $2.2 billion cash and scrip bid for ASX-listed Recall Holdings earlier this month.

Recall was spun out of logistics group Brambles last year and is Iron Mountain’s only listed peer. Recall rejected the $7 a share offer, saying it failed to adequately share with Recall shareholders the value created by a combination.

After the knock-back Iron Mountain boss William Meaney poured cold water on pursuing further talks with his target, claiming Recall had grossly overestimated the synergies that could be extracted.

There has been no movement on the takeover deal since Mr Meaney’s response, but Recall shares have continued to trade above the $7 offer price, suggesting investors expect another offer will be forthcoming.

Iron Mountain is being advised by Goldman Sachs. Recall is being advised by UBS and Bank of America Merrill Lynch.