Ritchie Bros. Auctioneers (RBA) released a statement on Monday responding to a letter from its co-founder and former chairman David Ritchie and former President and Director Russell Cmolik, stating that the company is different now compared to the company that Mr. Ritchie co-founded.
The co-founder stated in a letter last week that he and Cmolik have "deep concerns" regarding RBA's acquisition of U.S. auto retailer IAA in a deal valued at roughly $7 billion.
"The impending merger with IAA risks negatively impacting the culture of the company and, with it, its proud legacy," wrote Ritchie and Cmolik.
However, Ritchie Bros expressed on Monday that they have "great respect for Mr. Ritchie as a co-founder of the company," but he retired from the firm nearly 20 years ago, and it is "very different from the small family-run traditional auction business that Mr. Ritchie co-founded in Kelowna, British Columbia in 1958."
"Under the current Board and management team, the company has evolved, including through M&A, from physical auctions to embrace technology and digitization," the company stated. "Ritchie Bros. today is a trusted global marketplace for value-added insights, services, and transaction solutions. As a result, Ritchie Bros. is no longer a stagnant business with little to no growth. Instead, under current leadership, Ritchie Bros. is now delivering record growth, and premier shareholder returns year after year."
RBA believes the IAA acquisition was "carefully considered and thoroughly due diligenced," and that it is the right next step to accelerate its transformation into a "global, multi-vertical, digital marketplace."
On Friday, Reuters reported that its sources had told them that the majority of Ritchie Bros shareholders have voted in favor of the company buying IAA. Hedge fund Luxor Capital, which owns approximately 4.2% of Ritchie Bros, and has been urging shareholders to vote against the deal, commented in a regulatory filing on Monday that preliminary results show that 46% of RBA votes cast voted to defeat the proposed merger with IAA.
"Despite our best efforts on behalf of all shareholders and our disappointment in the outcome, we wish the Company well with its integration of IAA," said Doug Snyder, President of Luxor.
Luxor also responded to Mr. Ritchie and Mr. Cmolik's letter, agreeing with the concerns, adding that the vote on the merger is very close and shareholders can still cancel their votes.
"Despite the proxy deadline having passed, shareholders can still revoke their proxies (i.e., cancel their votes) cast in favor of the IAA Merger," declared Snyder. "We call on all shareholders who voted in favor of this deal to heed the warnings of Ritchie Bros.'s co-founder and former president and stop the IAA Merger."
By Sam Boughedda