Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Canada's Ritchie Bros raises cash payout under revised offer for IAA

Published 01/23/2023, 09:50 AM
Updated 01/23/2023, 04:02 PM
© Reuters. FILE PHOTO: The sign outside Richie Bros. Auctioneers is seen in Longmont, Colorado, U.S., February 21, 2017. REUTERS/Rick Wilking

(Reuters) -Canada's Ritchie Bros (NYSE:RBA) Auctioneers on Monday sweetened the cash component of its buyout offer for IAA (NYSE:IAA) Inc by 28%, valuing the U.S. auto retailer at $5.94 billion, and also secured the backing of a key IAA shareholder which had questioned the initial offer.

The latest cash-and-stock offer at $44.40 per share, will allow Ritchie to tap into a growing market for heavy machinery and equipment, salvaged cars, trucks and motorcycles, as well as auto parts.

IAA shares rose 4.9% in morning trade, while Ritchie Bros's Toronto-listed shares were up 3%.

The improved offer comes at a time when many companies are reducing costs and initiating layoffs in face of a potential economic downturn.

Shareholders of both the companies had initially pushed back the deal, set to be Ritchie's biggest, and raised concerns about the poor structuring of the combination.

However, on Monday, IAA's largest shareholder Ancora supported the revised bid. The activist investor had earlier questioned the sales process and the absence of a go-shop period.

Ritchie also said that Starboard Value LP chief Jeffrey Smith will join its board, with the activist investment firm making a $500 million investment.

"We look forward to benefiting from Jeff's expertise and working together as we complete this transaction," said Ann Fandozzi, chief executive officer of Ritchie Bros.

Under the revised offer, IAA stockholders would receive $12.80 in cash, up from $10 earlier, and 0.5252 Ritchie Bros. share for each IAA share, down from 0.5804.

Ritchie made the initial offer in November, valuing the company at about $7.3 billion, including debt.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The announcement triggered a large scale selloff by investors, sending Ritchie's stock down 18%.

The deal will be put to vote for shareholders of both companies on March 14. The shares underlying Starboard's investment will not be voted at the meeting, Ritchie said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.