FREE SUBSCRIPTION Includes: The Advisor Daily eBlast + Exclusive Content + Professional Network Membership: JOIN NOW LOGIN
Skip Navigation LinksHome / Articles / Read Article

Print

Ritchie Bros. Announces $500MM Strategic Investment from Starboard Value

By:
Date: Jan 24, 2023 @ 07:20 AM
Filed Under: Industry News

Ritchie Bros. Auctioneers Incorporated announced it has entered into a securities purchase agreement with Starboard Value LP and certain of its affiliates pursuant to which Starboard will make a concurrent $485 million convertible preferred equity and $15 million common share investment in Ritchie Bros.

In connection with the investment, Starboard Chief Executive Officer Jeffrey Smith will be appointed to the Ritchie Bros. Board of Directors effective following the later of the required approvals by Ritchie Bros. shareholders and IAA shareholders in connection with the company's pending acquisition of IAA, Inc.

"We welcome Starboard's strategic investment in Ritchie Bros., which we believe will provide us with additional financial flexibility," said Ann Fandozzi, CEO of Ritchie Bros. "Starboard shares our belief in the potential of the combination of Ritchie Bros. and IAA. We look forward to benefitting from Jeff's expertise and working together as we complete this transaction, which we believe will deliver significant value to all our shareholders."

"We are excited to become a shareholder of Ritchie Bros. as they take this important next step to accelerate the company's transformation and value-creation trajectory," said Smith. "We were investors in IAA's parent company prior to its spinout, so we know IAA well and are strong believers in the fundamentals of the business and the market opportunities that this transaction creates. We believe that, with Ritchie Bros.' leadership expertise, marketplace investments, yard footprint and comprehensive suite of solutions, they will be able to accelerate growth in each vertical. We are eager to work with the Ritchie Bros. team to ensure that the combined company executes on the significant synergy and growth opportunities outlined by Ritchie Bros. in today's investor presentation."

Terms of Agreement

Under the terms of the securities purchase agreement, Starboard has agreed to purchase $485 million of newly issuable senior preferred shares of Ritchie Bros., convertible into common shares with an initial conversion price of $73.00 per share, representing a premium of approximately 23 percent over Ritchie Bros.' volume-weighted average price over the 10 trading day period ending on January 20, 2023. The preferred shares will carry an initial 5.5 percent preferred dividend, which is payable in cash or in shares at the company's option, and will also be entitled to participate on an as-converted basis in the company's regular quarterly common share dividends.

Concurrently, Starboard has also agreed to purchase approximately $15 million of common shares in Ritchie Bros. at a purchase price of approximately $59.72 per share.

The shares underlying Starboard's investment will not be voted on at the Special Meeting of Ritchie Bros. Shareholders to be held with respect to the IAA transaction.

In the event that the merger between Ritchie Bros. and IAA is terminated, the company will have the right to redeem the preferred shares at a redemption price of 102 percent of par plus accrued and unpaid dividends.

Ritchie Bros. and IAA also announced a Amended Merger Agreement that enhances value for Ritchie Bros. shareholders while increasing cash consideration for IAA Shareholders. See the full release here.

The completion of the investment by Starboard remains subject to the satisfaction of customary closing conditions, including the filing of articles of amendment for the senior preferred shares, the TSX's acceptance of the proposed terms of the investment, approval of the listing of the common shares on the NYSE and TSX, and receipt of customary closing deliverables.

Advisors

Goldman Sachs & Co. LLC served as lead financial advisor and Guggenheim Securities, LLC served as co-lead financial advisor to Ritchie Bros. in connection with the pending acquisition of IAA and the Starboard investment. Evercore and RBC Capital Markets also served as financial advisors to the company. Goodwin Procter LLP, McCarthy Tétrault LLP and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisors to Ritchie Bros.



Comments From Our Members

You must be an Equipment Finance Advisor member to post comments. Login or Join Now.