Consultants recommend Ritchie Brothers Auctioneers not to acquire car retailer IAA
2023.03.06 13:09
Consultants recommend Ritchie Brothers Auctioneers not to acquire car retailer IAA
By Kristina Sobol
Budrigannews.com – On Monday, proxy advisory firms Institutional Shareholder Services and Glass Lewis advised shareholders not to approve Ritchie Brothers Auctioneers Inc.’s proposed $7 billion acquisition of IAA (NYSE:). Inc. The move hurts one of the most watched takeover deals of the year, which was first announced in November, as investors frequently follow recommendations from proxy firms.
ISS cited a drop in the stock price following the announcement of the transaction and a lag in performance as causes for concern. Both advisors emphasized the deal’s potential risks.
In its report, which was seen by Reuters, ISS wrote, “It appears that RBA’s strong standalone prospects, proven over a period of time through robust performance, offer a better understood and verified path to shareholder value creation.”
On March 14, shareholders will decide whether or not to approve the proposed deal.
NYSE: The Ritchie Brothers In the first few minutes of Monday’s trading, the stock price increased by more than 5%. IAA’s stock cost dropped almost 9%.
The acquisition of Ritchie Bros, a Canadian company that auctions and sells used heavy industrial equipment, aims to broaden Ritchie Bros’ customer base, boost growth and strategic plans, and cut costs by expanding Ritchie Bros’ footprint in vehicle remarketing.
Ritchie Bros was able to modify the terms of the deal thanks to an investment of $500 million from activist investor Starboard Value in January. This helped Ritchie Bros win crucial support from investor Ancora Group Holdings, which had previously opposed the deal.
However, a number of investors on both sides are opposing the deal, claiming that it favors IAA shareholders and does not provide enough upside for RBA investors and would divert Ritchie Bros. from its core business.
