Iron Mountain acquires ITRenew in sustainability move

Iron Mountain has been around for 60 years, and it’s well known for providing storage and information management services that protect critical business assets and highly sensitive data. But it’s probably is not the first name that comes to mind when you think of IT hardware. 

That’s not for lack of trying. Since 2017, Iron Mountain has invested more than $2 billion in building and buying data centers. It has a total of 18 around the world, and those data centers are powered by 100% renewable energy.

Now it’s making inroads into the broader data-center supply chain with the acquisition of ITRenew, which specializes in IT asset disposal. With ITRenew, Iron Mountain sees opportunities to enhance the value of its environmental, social and governance offerings.

“The acquisition bolsters Iron Mountain’s sustainability practice in a new way,” said Jennifer Cooke, research director for edge strategies at IDC. “The company has made major investments in greener sources of energy. Now, they have a way for their large cloud service provider customers to more easily apply circular economy principles into their equipment life cycle practices [and] responsibly recycle used IT gear. The combination of shifting to greener energy and reducing waste is very important to the caliber of customers that Iron Mountain has.”

ITRenew was founded in 2000 and has become a leader in the so-called “circular economy,” which is a fancy way of saying used equipment sales. While the company specializes in IT asset disposal, it has made a niche for itself buying slightly used servers from hyperscalers, refurbishing them, and selling them for about half the price of new gear. It has enjoyed decent sales thanks to the supply-chain shortage, which has made it hard to get new equipment. (ITRenew also recently inked a deal to provide pre-owned equipment to leading edge data-center provider Vapor IO.)

And it has earned a decent valuation. Iron Mountain will pay $725 million in cash for 80% of the shares of ITRenew, with the intent to acquire the remaining 20% in the next three years. ITRenew is owned by the private equity firm ZMC.

As of September 30, ITRenew had trailing twelve-month revenue in excess of $415 million, and it has a two-year compounded annual growth rate of approximately 16%. It projects the total addressable IT asset disposition market is $30 billion and will grow 11% compounded annually over the next five years.

Following the close of the transaction, ITRenew will become the platform for Iron Mountain’s IT asset lifecycle management business, providing end-to-end services to the hyperscale and corporate data center segments.

“The deal provides [ITRenew] the ability to connect with large enterprise customers that could be a channel to consume decommissioned gear from large cloud service providers. Iron Mountain is a trusted partner, which will foster greater consideration,” said IDC’s Cooke.

“The potential exists to really put in place circular economy principles that can make a big impact in reducing waste and ensuring the optimal use of natural resources,” she added.

The transaction is expected to close in the first quarter of 2022, subject to regulatory approval and other closing conditions.