Luxor Reminds Ritchie Bros. Shareholders of Deadline to Vote Against Value Destructive Merger With IAA
Luxor Capital Group urges shareholders of Ritchie Bros. Auctioneers (NYSE: RBA) to vote against the proposed merger with IAA, Inc. (NYSE: IAA) by
- Luxor Capital represents approximately 4.2% of RBA's shares, indicating significant shareholder engagement against the merger.
- Both ISS and Glass Lewis oppose the merger, describing it as potentially value destructive to RBA shareholders.
- Concerns regarding the management's credibility and decision-making process related to the merger.
- The merger may entail unnecessary risks and costs that could negatively affect shareholder value.
Shareholders Can Vote Against the IAA Merger But Must Act by
Standalone RBA is the Best Path for Shareholder Value Creation
RBA Shareholders and both ISS and Glass Lewis Oppose the IAA Merger
The Full Text of the Letter Follows:
Dear Fellow Shareholders:
Your vote is needed to end an unfortunate period in RBA’s history. We share this investment in RBA with you and we believe in the future value of the Company on a stand-alone basis. Unfortunately, our board of directors (the “Board”) has failed to act in our best interests and is myopically focused on trying to consummate a transaction that shareholders and both of the leading independent proxy advisory firms have all recognized as a significant and unnecessary risk to our investment.
Together, we can vote down the IAA Merger, return RBA to a path of focused, shareholder value creation and reverse the damage done to the Company trajectory for long-term, sustainable value. History is littered with companies making poor decisions on M&A, particularly when predicated on manipulated projections and justified by baseless assumptions of revenue ‘synergies’ that bear significant costs and risks, and hold little to no basis in reality. As owners of the business, we cannot allow this to happen to RBA and must stop this ill-conceived, enormously dilutive and value destructive transaction.
The time to act is now and we urge all RBA shareholders to vote AGAINST the IAA Merger on the GREEN proxy card.
Get Your Votes in Ahead of the Proxy Deadline
In light of RBA’s vote cutoff timing, it is important that proxies are delivered by
Significant Shareholders and the Leading Proxy Advisory Firms ISS and Glass Lewis Are Recommending You Vote No
Leading independent voices and significant RBA investors have stated, in unequivocal terms, that this deal is value destructive to existing RBA investors. It is rare for both ISS and Glass Lewis to encourage shareholders to vote against a publicly announced M&A transaction, and their recommendations here are well-considered and strongly worded.
Consider the statements of the leading proxy advisory firms as they independently evaluated the prospects of the IAA merger. (Emphasis added)
ISS,
"Coupling these concerns with the significant sell-off on the initial announcement, ongoing underperformance relative to wider indices, and multiple compression, 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.”
“Credibility is a particularly important consideration in this case, and it has been damaged by the shifting narratives around the long-term strategy and evergreen targets, as well as the miscalculated treatment of shareholders’ concerns during the assessment of revised terms.”
“Assessment of the potential risk-adjusted upside from the acquisition necessarily incorporates a consideration of one’s trust in the board and management team, whose credibility has been impaired by its communication strategy post-announcement, including walking back its long-term targets, as well as decisions made during the deal process. Together, these considerations suggest that the board prioritized getting the deal done over ensuring that this was indeed the best path forward.”
“During engagement with ISS, RBA did not provide specific responses to questions about areas of improvement at IAA, nor to those focused on the costs associated with improving IAA topline and margins. According to RBA, having meetings with top level executives at insurance companies and training sales reps on account management and customer service will be sufficient and effective…these responses appear to be unrealistic understatements.
“If there are no risks or costs associated with improving IAA, and it is available for sale at an attractive multiple, there should have been other bidders. There are likely costs and timing risks, and there is uncertainty associated with Copart’s response to any moves made by IAA. These realities do not appear to be sufficiently acknowledged by RBA.”
Glass Lewis,
“We believe RBA's board and management should remain focused on delivering upon the Company's standalone plan as the better alternative for generating superior shareholder returns and risk-adjusted value going forward.”
“In our opinion, the terms and structure of the transaction do not appear to provide either a sufficient margin of safety or a sufficiently compelling value upside for RBA shareholders.”
“The visibility into how and when achievement of any incremental revenue and EBITDA remains low, in our view. If these opportunities were so easily executed upon, IAA management might have realized them already.”
“Furthermore, despite assurances by the RBA board and management regarding the work done to diligence and verify these opportunities, management's changing tune on the rationale since the original deal announcement, from adding scale and diversification, to focusing on using IAA's yard capacity, to using RBA's yard capacity to shore up CAT response, to taking back share in IAA's market and growing IAA's business in entirely new vectors, is not particularly confidence inspiring, in our view.”
“Therefore, we believe the proposed transaction offers a dubious risk/reward proposition, particularly when compared to what remains a strong and growing RBA standalone business that is performing ahead of management projections and investor expectations.”
Consider the Statements of our Fellow Shareholders
“…we have significant misgivings about the strategic and financial rationale for this deal, and think the structure and timing are concerning. Based on our current understanding and the current deal terms, it is our intention to vote against the transaction.”
- Janus Henderson,
“We believe that RBA's proposed acquisition of IAA, at the current deal terms, is a flawed transaction that burdens RBA shareholders with unnecessary risk without providing enough credible upside relative to the standalone RBA opportunity.”
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“…the proposed acquisition of IAA by RBA (the “Transaction”) will destroy significant value for RBA shareholders and is impossible to justify, especially in light of the extremely costly terms of the investment by
- Deep Field Asset Management,
Join Luxor and many other RBA shareholders in voting the GREEN proxy AGAINST the IAA Merger by
We invite shareholders to please review our previous investor presentations, which offer more detailed discussions surrounding our views of the standalone RBA business, the lack of strategic rationale for the IAA Merger, the RBA Board’s changing narrative, the poor governance process, the exorbitantly expensive and unnecessary Starboard financing and more.
Sincerely,
*Permission to use quotations from third parties was neither sought nor obtained.
If you require assistance in voting your GREEN proxy or would like to receive updates, please call |
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