The Canadian heavy equipment seller now brings a larger cash component to the deal, but investors have “significant misgivings” about the roughly US$6-billion offer
Both investors objected specifically to the terms activist investor Starboard Value LP received in exchange for a US$500-million capital injection that Ritchie Bros. used in part to increase the cash component of its offer to US$12.80 per share from US$10 previously.
“We already had misgivings about issuing Ritchie Brothers common equity to fund” part of the IAA transaction, Janus said in its letter. “However, we believe that the terms agreed to for the preferred equity are even more concerning.” Luxor, which has opposed the IAA deal since it was originally proposed in November, 2022, said in a Jan. 24 statement that the revised deal, which in addition to the larger cash component for IAA shareholders also included a US$1.08 one-time special dividend for Ritchie Bros. shareholders, was “overwhelmed by the extravagant terms offered to Starboard.”
“Copart has invested heavily in hard assets, including its real estate footprint, with more locations and larger yards, and a larger international presence,” Janus said in its letter. “This gives Copart a structural advantage over IAA that could take a great deal of investment to overcome ... [and] it is not the responsibility of Ritchie Brothers shareholders to rescue IAA from a competitively disadvantaged position.
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