A shareholder of Ritchie Bros. Auctioneers Inc. says the company's plan to buy vehicle auction company IAA Inc. lacks compelling logic and it plans to oppose the deal.
Burnaby-based Ritchie Bros. has signed a deal to buy the U.S. company in an agreement valued at US$7.3 billion, including assumed debt, when it was announced in November 2022.
Luxor Capital Group LP, which holds a 3.6 per cent stake in Ritchie Bros., says it will vote against the plan to issue shares in connection with the deal that would see IAA shareholders receive a combination of cash and shares.
When the deal was announced, Ritchie Bros. chief executive Ann Fandozzi called IAA a complementary business that would help her company grow.
However, Luxor says IAA is a highly challenged business that is structurally disadvantaged to its primary competitor and rapidly losing market share.
The investment management company says post-merger integration and operations will inevitably require Ritchie Bros. to shift management attention and critical resources to IAA and take focus away from numerous initiatives at the company.
This report by The Canadian Press was first published Jan. 18, 2023.
Companies in this story: (TSX:RBA)
The Canadian Press