NCC Group acquires US business in £156m deal

Cybersecurity firm says the move provides “immediate scale” by broadening US offering

NCC Group has agreed to acquire the intellectual property management (IPM) business of US-based Iron Mountain in a deal worth £156m.

Iron Mountain's IPM arm provides software resilience services to more than 6,000 customers across the US and reported revenues of £23.3m for 2020.

The move will provide "immediate scale to NCC Group's software resilience business", the company says, to "create a market-leading escrow business".

"This acquisition will transform NCC's software resilience business, making it a market leader, whilst delivering immediate financial and operational benefits to the whole of the Group," said NCC Group CEO Adam Palser.

"IPM will fit into our group perfectly and we are looking forward to welcoming our new colleagues and working alongside them.

"In addition, we can already see tremendous opportunities to grow the combined business by offering IPM's blue chip clients new services and support.

"Following completion, NCC Group will be a stronger and broader business with an even greater ability to support clients in the ceaseless struggle against cyber-crime in all its forms."

Some of the deal will be financed by a £70m share placing, the company says.

The business also predicts that, together, NCC and IPM will have the "leading share" of the total current US addressable market, while claiming that the move will be "significantly accretive" to earnings per share.

It adds that the acquisition will "strengthen the group's cash generation" because of "IPM's cash conversion ratio of over 90 percent for the last three years", while improving the company's financial flexibility which provides a "platform to make further strategic investments".

Part of the "compelling financial rationale" NCC Group sets out for the acquisition centres around recurring revenue, with NCC claiming it will bring an "enlarged recurring revenue base" because 80 percent of IPM's revenue is recurring.

IPM's senior staff have agreed to continue in their roles following completion of the deal, which is expected to go through later this month.