“Flawed and Rushed”: Investors Ritchie Bros. $7,000 deal for IAA – Business News

Investors are pushing back against one of B.C.’s biggest buyout deals in 2022 — a deal a shareholder group is calling “flawed and rushed.”

Burnaby’s Ritchie Bros. Auctioneers Inc. (TSX:RBA) (NYSE:RBA) announced last week that IAA Inc. (NYSE: IAA ) said it wanted to buy the American auto retailer in a deal worth $7.3 billion, including $1 billion from IAA. the debt

Ancora Holdings Group LLC, which owns four percent of IAA’s outstanding shares, said in a letter to IAA’s board on Monday (Nov 14) that the company could get a better price with more time and effort.

“We view the proposed sale of IAA to Ritchie Bros. as a sweetheart deal that puts the interests of leadership ahead of the interests of shareholders. If the current structure and conditions remain in place, we intend to do everything in our power to oppose the transaction,” the Cleveland-based wealth management firm said.

Ancora praised Ritchie Bros. CEO Ann Fandozzi in the letter to management, but said the IAA has been mismanaged by its management team. In March, when it asked the board to replace IAA CEO John Kett, Ancora said it would pay a $12 million change-of-control payment and Ritchie Bros. that he will receive a seat on the board to oversee “poor objective performance.” and “a series of devastating capital allocation decisions.”

These capital allocation decisions include international expansion plans through last year’s $310 million acquisition of UK-based Synetiq Ltd.

Representatives for IAA and Ritchie Bros. did not immediately respond to emails and phone calls from BIV.

Like IAA, Synetiq also specializes in salvage and auction services in the commercial vehicle sector. Ritchie Bros. It is known for auctioning heavy equipment and trucks.

Ancora also raised concerns in its letter to the board about whether the IAA has explored other potential suitors for a sale that would add more value.

This investor pushback is not the first time Ritchie Bros. has been rejected for a takeover deal this year.

CEO Fandozzi vowed last spring to continue pursuing corporate takeovers after British regulators put the kybosh on a £775 million ($1.2 billion) deal to buy Euro Auctions UK Ltd.

The UK’s Competition and Markets Authority (CMA) was cautious enough about the deal that it referred it to a second phase.

The CMA said in a March 4 decision that the acquisition would result in a “significant lessening of competition” in the UK, and noted that Euro Auctions and Ritchie Bros. that they are the two largest providers of auction services in the country for heavy machinery and that they have “nothing but”. significant competitors” after the acquisition.

Ritchie Bros followed through and announced that it did not believe there was a realistic chance that the CMA would approve the sale.

Ritchie Bros. embarked on a major acquisition two years ago.

Its first target was US data intelligence firm Rouse Services LLC, which it bought in October 2020 for $275 million ($351 million at the time) for $175 million ($224 million at the time) for Connecticut-based SmartEquip Inc. helps companies acquire equipment parts for large fleets and manage equipment services.