Proxy advisors urge shareholders to reject Ritchie Bros bid for IAA (updated)

RB Global

06/03/2023 14:57

(Adds news on Glass Lewis, background on deal)
    By Svea Herbst-Bayliss
       NEW YORK, March 6 (Reuters) - Proxy advisory firms
Institutional Shareholder Services and Glass Lewis on Monday
recommended that shareholders reject Ritchie Brothers
Auctioneers Inc's  RBA.TO  planned $7 billion acquisition of
U.S. auto retailer IAA Inc  IAA.N . 
    As investors often follow recommendations from the proxy
firms, the move deals a blow to one of the year's most widely
watched takeover deals, which was first announced in November. 
    Both advisors underscored the potential risks associated
with the deal, with ISS pointing to a drop in the stock price
after the transaction was announced and a lag in performance as
reasons for concern.
    "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," ISS
wrote in its report, which was seen by Reuters.
    Shareholders vote on March 14 on whether to approve the
proposed deal.
    The Ritchie Bros stock price climbed more than 5% in the
first minutes of trading on Monday. IAA's stock price dropped
nearly 9%.
    For Ritchie Bros, a Canadian company that auctions and sells
used heavy industrial equipment, the acquisition is intended to
diversify its customer base, boost growth and strategic plans by
giving it a bigger footprint in vehicle remarketing, and help
cut costs.
    In January, Ritchie Bros received a $500 million investment
from activist investor Starboard Value that allowed it to revise
the deal terms and win critical support from investor Ancora
Group Holdings, which had previously opposed the deal.
    But a number of investors on both sides are pushing back on
the deal, arguing it would distract Ritchie Bros from its core
business and that it favors IAA shareholders without offering
enough upside for RBA investors. 

 (Reporting by Svea Herbst-Bayliss; Editing by Chizu Nomiyama
and Jan Harvey)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))