Ritchie Bros. and IAA amended the terms of their previously announced merger agreement, pursuant to which Ritchie Bros. will acquire IAA in a stock and cash transaction. The amended agreement was unanimously approved by each company’s board of directors.
Under the terms of the amended agreement, IAA shareholders will receive $12.80 per share in cash and 0.5252 common shares of Ritchie Bros. for each share of IAA common stock they own. The change in consideration mix represents a shift in the cash/stock mix to approximately 29% cash and 71% stock from the previous mix of 22% cash and 78% stock.
Additionally, the Ritchie Bros. board of directors expects to approve the issuance of a one-time special dividend to Ritchie Bros. shareholders in the amount of $1.08 per common share, which will be payable to holders of record as of a pre-closing record date to be determined with the consent of the Toronto Stock Exchange and contingent on the closing of the IAA transaction.
“We are pleased to have reached an amended agreement with IAA, which reflects feedback we’ve received from shareholders regarding the best structure for the transaction,” Ann Fandozzi, CEO of Ritchie Bros., said. “We believe that the transaction with IAA will allow us to unlock significantly more value for shareholders than either company could deliver standalone through the realization of cost synergies and additional revenue opportunities. Together, we expect to accelerate our marketplace vision by increasing our transaction volume, driving growth of attached services and advancing our yard strategy. We look forward to continuing to discuss the anticipated benefits of the transaction with our shareholders.”
“We believe that the revised transaction is in the best interests of IAA and our shareholders,” John Kett, CEO and president of IAA, said. “The amended agreement will provide our shareholders with increased cash consideration upon close of the transaction while retaining a significant interest in the upside potential of the combined company. Our view is unaltered that combining Ritchie Bros. and IAA’s marketplace capabilities will create a unique value proposition with significantly increased earnings power and shareholder value creation. In addition, we appreciate the collaborative and constructive dialogue with Ancora and their public support for the transaction.”
“Ancora is pleased to support this revised transaction, which positions IAA shareholders to benefit from a material improvement in cash consideration while retaining strong participation in the combined company’s increased earnings power,” Fred DiSanto, chairman and CEO of Ancora, and James Chadwick, president of Ancora Alternatives, said in a joint statement. “After expressing concerns regarding the initial transaction terms, we had a series of productive, private discussions with each company’s leadership team to provide feedback. We appreciate that both companies were open and responsive to our input, and we look forward to supporting Ann and her team as they integrate these two exceptional businesses.”
Pursuant to a mutual cooperation agreement reached between IAA and Ancora, Tim O’Day, the current president and CEO of Boyd Group Services is expected to be appointed to the Ritchie Bros. board of directors upon the closing of the transaction. He will be one of the four IAA board designees, subject to satisfactory completion of customary vetting and onboarding matters. Under the terms, Ancora agreed to vote its shares, representing approximately 4% of IAA’s voting power, in favor of the transaction.
The companies continue to expect to close the transaction in the first half of 2023, subject to approval by Ritchie Bros. shareholders of the issuance of Ritchie Bros. common shares in connection with the transaction and approval of IAA shareholders of the transaction, as well as other customary closing conditions.
