Mentmore exits from venture with US partner

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Mentmore, the storage specialist which runs the Spaces warehouses, has sold out of its business services joint venture and promised to return £80m to shareholders.

The move comes just four months after the joint venture, Iron Mountain Europe, acquired the European document storage business of Hays for £186m. Iron Mountain of the US is paying £82.5m to acquire Mentmore's 49.9 per cent stake.

Martin Nye, Mentmore's chief executive, said the company preferred to concentrate future investment in its personal storage business rather than paying for more acquisitions to bulk up a joint venture it did not control.

"It is a very good business but there would be ongoing funding requirements. The value we are adding to the joint venture has declined since its formation in 1999, when Iron Mountain had no European experience. Now the business has a strong standalone management."

Mentmore had been due to pay £35m to Iron Mountain in January as its share of the Hays acquisition.

Yesterday's sale pushed Mentmore shares up 1p to 88p. It leaves the group focused on personal storage, where Mentmore runs 40 distinctive orange Spaces warehouses in the UK and 7 similar outfits in central Paris, branded as Une Pièce en Plus ("an extra room").

Richard Jones, analyst at Brewin Dolphin, said the sale of the stake in Iron Mountain Europe was "a pity". He said: "The trouble is that the Americans held the whip hand. They have put in most of the investment, and Mentmore didn't have enough cash to put in. The reality is that Iron Mountain didn't really need Mentmore any more, especially since most future expansion is going to be outside the UK. The Americans also had an option to buy the stake first, which meant Mentmore got a reasonable price rather than a great price."

The personal storage side of Mentmore's operating profit before goodwill was £15m in the six months to 31 October - up £3m thanks largely to an acquisition - contributing to a group pre-tax profit of £2.1m. That compares with £5.6m last time.