Ritchie Bros. and Euro Auctions entered into an agreement under which Ritchie Bros. will acquire Euro Auctions for an enterprise value of £775 million (approximately $1.08 billion).

Founded in 1998, Euro Auctions conducts unreserved heavy equipment auctions with onsite and online bidding under the brands Euro Auctions and Yoder & Frey. It has more than 200 employees in 14 countries.

In 2020, Euro Auctions conducted 60 auctions, selling close to 90,000 items for more than £484 million ($672.26 million) across its nine locations in the United Kingdom, Northern Ireland, Germany, Spain, the United Arab Emirates, Australia and the United States. Similar to Ritchie Bros., Euro Auctions also sells items through a timed auction format and a daily marketplace with buy now and make offer options.

“Ritchie Bros. and Euro Auctions are an ideal fit with a united goal to make asset insights, service offerings and disposition solutions easier than ever,” Ann Fandozzi, CEO of Ritchie Bros., said. “Euro Auctions has an incredibly talented team with expertise in asset sourcing, auction operations, sales and customer service. Their ‘can do’ attitude and entrepreneurial spirit combined with technology has helped them adapt and grow in much the same way as we have. This acquisition significantly accelerates our strategy to drive revenue and earnings growth and add shareholder value by continuing to expand our capabilities in new channels, sectors, regions and customer segments.”

“Dave Ritchie and his brothers were a big inspiration for my brothers and I in the creation of Euro Auctions,” Derek Keys, founder and director of Euro Auctions, said. “We modeled much of what we do off Dave’s customer-centric philosophy, which still runs through Ritchie Bros. today. Bringing us together will drive value for customers as we provide more equipment, solutions and services to the many industries and regions in which we operate.”

Ritchie Bros. will be retaining Euro Auctions’ employees and its brand. This will expand Ritchie Bros.’ overall footprint and access to equipment while also allowing it to tap into new revenue streams with service offerings to Euro Auctions’ customers, including those in inventory management services, data solutions, financing, warranty, insurance, inspections, refurbishing and shipping.

Under the terms of the transaction, Ritchie Bros. will acquire 100% of the equity of the companies comprised within the Euro Auctions group for an enterprise value of £775 million (approximately $1.08 billion) in cash. This represents an implied multiple of approximately 15.3x 2021E EBITDA (non-GAAP measure), including run rate synergies. Ritchie Bros. intends to finance the transaction through a combination of cash on hand and new debt. Ritchie Bros. also has bridge financing commitments from Goldman Sachs Bank, subject to customary terms and conditions, to facilitate the transaction close. Following the close of the transaction and the required financing, Ritchie Bros. is expected to have an adjusted net debt to adjusted EBITDA ratio (non-GAAP measure) of approximately 3.9x.

Ritchie Bros. secured employment arrangements with management of the Euro Auctions business, including Derek Keys, who will continue to be involved for a minimum of three years post-closing. It is intended that Jonnie Keys will assume a senior leadership position and Lynden Keys and Trevor Keys will be retained as sourcing leads.

Ritchie Bros.’ board of directors approved the transaction, which is expected to close in late 2021 or early 2022, subject to regulatory clearances and the satisfaction of other customary closing conditions.

Goldman Sachs is serving as exclusive financial advisor to Ritchie Bros., while Norton Rose Fulbright and Skadden, Arps, Slate, Meagher & Flom are serving as its legal advisors and KPMG is serving as its accounting, tax and IT advisor. Jefferies International is serving as financial advisor and A&L Goodbody is serving as legal advisor to the vendors of Euro Auctions.