Ritchie Bros. Releases Presentation Highlighting Benefits of Proposed IAA Transaction, Addressing Luxor';s Misleading Claims and Correcting Luxor's Flawed Analysis

Rhea-AI Summary

Ritchie Bros. Auctioneers (NYSE: RBA) urges shareholders to vote in favor of its acquisition of IAA, Inc. (NYSE: IAA) at the upcoming Special Meeting on March 14, 2023. The deal could unlock up to $76 in incremental value per share, including $100 to $120 million in cost savings and $250 to $780 million in EBITDA growth opportunities. CEO Ann Fandozzi emphasizes the complementary nature of IAA's assets and the potential for significant financial benefits. Ritchie Bros. also counters criticisms from Luxor Capital Group, asserting that their analysis is flawed. Shareholders of record as of January 25, 2023, are eligible to vote.

Positive

• Acquisition of IAA expected to unlock up to $76 in incremental value per share.
• $100 to $120 million in projected cost savings from the transaction.
• Estimated EBITDA growth opportunities of $250 to $780 million.
• Ritchie Bros. retains commitment to return excess capital to shareholders.

Negative

• None.

Urges Ritchie Bros. Shareholders to Vote "FOR" All Proposals on the WHITE Proxy Card

VANCOUVER, BC, Feb. 22, 2023 /PRNewswire/ - Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA) ("Ritchie Bros.") today released a presentation regarding its acquisition of IAA, Inc. (NYSE: IAA) ("IAA") and the reasons Ritchie Bros. shareholders should vote to approve the transaction at the March 14, 2023 Special Meeting of Shareholders. The presentation has been filed with the U.S. Securities and Exchange Commission and is available at www.RBASpecialMeeting.com.

Ann Fandozzi, CEO of Ritchie Bros., said, "The IAA transaction is expected to unlock substantial value that neither Ritchie Bros. nor IAA could achieve on its own, and we are confident in our ability to realize it. This confidence is grounded in the extensive due diligence we conducted before entering the IAA agreement, the complementary nature of the IAA asset, management's experience in the auto industry and our Board and management team's record of execution – both in M&A integration and driving successful transformation." 

"We urge our shareholders to put aside Luxor Capital Group LP's ("Luxor") misleading claims and flawed analysis by voting 'FOR' the IAA acquisition on the WHITE proxy card. The compelling strategic and financial benefits we can create with IAA affirm our strong belief that the IAA acquisition is the most value maximizing opportunity for the Company," continued Ms. Fandozzi.

Highlights of the presentation include:

• Significant value creation and upside potential beyond Ritchie Bros.' standalone strategic planⁱ: The transaction with IAA positions Ritchie Bros. to unlock up to $76 in incremental value per share. This includes at least $100 to $120 million in expected cost savings as well as approximately $250 to $780 million of incremental EBITDA growth opportunities, which together could translate to an additional $21 to $61 per share of valueⁱ. The potential re-rating on these opportunities would provide approximately $5 to $15 per share of incremental upsideⁱ. The transaction is also expected to result in strong free cash flow, providing financial flexibility to continue investing in the business and enabling rapid deleveraging to 2.0xⁱⁱ adjusted EBITDA within 24 months post close. Ritchie Bros. remains committed to returning excess capital to shareholders.
  
  
• A step-function accelerant of the Company's strategic vision: IAA is a critical accelerant to Ritchie Bros.' strategic vision. For example, the addition of IAA's 210 yards, which have approximately 45% of excess capacity, will accelerate the Company's satellite yard expansion strategy and result in significantly higher ROI. Plugging IAA into the Ritchie Bros. marketplace is expected to deepen IAA customer relationships and double GTV as IAA customers access more value-added services and solutions, such as financing and parts sourcing.
  
  
• IAA expands Ritchie Bros.' reach into the attractive, adjacent vertical salvage vehicle market with a growing, countercyclical business. IAA is a key player in this market and has shown counter-cyclicality and resilience through economic cycles. IAA has delivered 13% revenue CAGR from 2004 to 2022 and growth in every year except 2020. The IAA team continues to build on this momentum, achieving approximately $541 million in adjusted EBITDA in fiscal 2022, above consensus expectations of approximately $528 millionⁱⁱⁱ.
  
  
• A deliberate, thoughtful process led by Ritchie Bros.' independent Board of Directors: The acquisition was the culmination of a multi-year assessment by the Ritchie Bros. Board of Directors and management as well as rigorous negotiation with IAA. After extensive shareholder engagement, Ritchie Bros. delivered enhanced deal terms, including a reduction in the price paid per IAA share and a special dividend to Ritchie Bros. shareholders, resulting in $115 million^iv of incremental value for Ritchie Bros. shareholders.
  
  
• Luxor's claims are misleading and based on flawed analysis: Luxor's criticisms of the IAA transaction ignore the upside potential created through the combination, and Luxor's standalone valuation of Ritchie Bros. is either replete with mathematical errors or purposefully deceptive. Luxor's claims regarding the Starboard investment also show a profound misunderstanding of the actual terms and structure of this investment. In fact, the Starboard preferred does not meaningfully impact the IAA deal value, but does enhance the value upside for all Ritchie Bros.' shareholders. Simple math – so long as it is accurate — shows that the $115 million^iv of additional value provided to Ritchie Bros. shareholders as a result of the Starboard investment and amended IAA agreement outweighs the value of the Starboard preferred.

Ritchie Bros. shareholders of record as of the close of business on January 25, 2023 are eligible to vote at the Special Meeting. The Ritchie Bros. Board of Directors unanimously recommends that shareholders vote "FOR" all proposals listed on the WHITE proxy card and discard any green proxy card sent by Luxor.

Visit www.RBASpecialMeeting.com for more information about the meeting and how Ritchie Bros. shareholders can vote to protect their interests and realize the value created by the IAA transaction.

Any shareholder with questions about the Special Meeting or in need of assistance in voting their shares should contact:

Laurel Hill

MacKenzie Partners, Inc.

North American Toll Free: 1-877-452-7184

North American Toll Free: 1-800-322-2885

Outside North America: 416-304-0211

Email: proxy@mackenziepartners.com

Email: assistance@laurelhill.com

About Ritchie Bros.

Established in 1958, Ritchie Bros. (NYSE and TSX: RBA) is a global asset management and disposition company, offering customers end-to-end solutions for buying and selling used heavy equipment, trucks and other assets. Operating in a number of sectors, including construction, transportation, agriculture, energy, mining, and forestry, the company's selling channels include: Ritchie Bros. Auctioneers, the world's largest industrial auctioneer offering live auction events with online bidding; IronPlanet, an online marketplace with weekly featured auctions and providing the exclusive IronClad Assurance(R) equipment condition certification; Marketplace-E, a controlled marketplace offering multiple price and timing options; Ritchie List, a self-serve listing service for North America; Mascus, a leading European online equipment listing service; Ritchie Bros. Private Treaty, offering privately negotiated sales; and sector-specific solutions GovPlanet, TruckPlanet, and Ritchie Bros. Energy. The company's suite of solutions also includes Ritchie Bros. Asset Solutions and Rouse Services LLC, which together provides a complete end-to-end asset management, data-driven intelligence and performance benchmarking system; SmartEquip, an innovative technology platform that supports customers' management of the equipment lifecycle and integrates parts procurement with both OEMs and dealers; plus equipment financing and leasing through Ritchie Bros. Financial Services. For more information about Ritchie Bros., visit RitchieBros.com.

Photos and video for embedding in media stories are available at rbauction.com/media.

Forward-Looking Statements

This communication contains information relating to a proposed business combination transaction between Ritchie Bros. Auctioneers Incorporated ("RBA") and IAA, Inc. ("IAA") in addition to information relating to the investment into RBA by Starboard Value LP and certain of its affiliates (together, "Starboard"). This communication includes forward-looking information within the meaning of Canadian securities legislation and forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, "forward-looking statements"). Forward-looking statements may include statements relating to future events and anticipated results of operations, business strategies, the anticipated benefits of the proposed IAA transaction, the anticipated impact of the proposed IAA transaction on the combined company's business and future financial and operating results, the expected or estimated amount, achievability, sources, impact and timing of cost synergies and revenue, EBITDA, growth, operational enhancement, expansion and other value creation opportunities from the proposed IAA transaction, the expected debt, de-leveraging, cash flow generation and capital allocation of the combined company, the anticipated closing date for the proposed IAA transaction, other aspects of RBA's or IAA's respective businesses, operations, financial condition or operating results and other statements that are not historical facts. There can be no assurance that the proposed IAA transaction will in fact be consummated. These forward-looking statements generally can be identified by phrases such as "will," "should," "expects," "plans," "anticipates," "could," "can," "intends," "target," "goal," "projects," "contemplates," "believes," "predicts," "potential," "continue," "foresees," "forecasts," "estimates," "opportunity" or other words or phrases of similar import.

It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of the combined companies or the price of RBA's common shares or IAA's common stock. Therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. While RBA's and IAA's management believe the assumptions underlying the forward-looking statements are reasonable, these forward-looking statements involve certain risks and uncertainties, many of which are beyond the parties' control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including but not limited to: the possibility that shareholders of RBA may not approve the issuance of new common shares of RBA in the transaction or that stockholders of IAA may not approve the adoption of the merger agreement; the risk that a condition to closing of the proposed IAA transaction may not be satisfied (or waived), that either party may terminate the merger agreement or that the closing of the proposed IAA transaction might be delayed or not occur at all; the anticipated tax treatment of the proposed IAA transaction; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed IAA transaction; the diversion of management time on transaction-related issues; the response of competitors to the proposed IAA transaction; the ultimate difficulty, timing, cost and results of integrating the operations of RBA and IAA; the effects of the business combination of RBA and IAA, including the combined company's future financial condition, results of operations, strategy and plans; the failure (or delay) to receive the required regulatory approval of the transaction; the fact that operating costs and business disruption may be greater than expected following the public announcement or consummation of the proposed IAA transaction; the effect of the announcement, pendency or consummation of the proposed IAA transaction on the trading price of RBA's common shares or IAA's common stock; the ability of RBA and/or IAA to retain and hire key personnel and employees; the significant costs associated with the proposed IAA transaction; the outcome of any legal proceedings that could be instituted against RBA, IAA and/or others relating to the proposed IAA transaction; restrictions during the pendency of the proposed IAA transaction that may impact the ability of RBA and/or IAA to pursue non-ordinary course transactions, including certain business opportunities or strategic transactions; the ability of the combined company to realize anticipated synergies in the amount, manner or timeframe expected or at all; the failure of the combined company to realize potential revenue, EBITDA, growth, operational enhancement, expansion or other value creation opportunities from the sources or in the amount, manner or timeframe expected or at all; the failure of the trading multiple of the combined company to normalize or re-rate and other fluctuations in such trading multiple; changes in capital markets and the ability of the combined company to generate cash flow and/or finance operations in the manner expected or to de-lever in the timeframe expected; the failure of RBA or the combined company to meet financial forecasts and/or KPI targets; any legal impediment to the payment of the special dividend by RBA, including TSX consent to the dividend record date; legislative, regulatory and economic developments affecting the business of RBA and IAA; general economic and market developments and conditions; the evolving legal, regulatory and tax regimes under which RBA and IAA operates; unpredictability and severity of catastrophic events, including, but not limited to, pandemics, acts of terrorism or outbreak of war or hostilities, as well as RBA's or IAA's response to any of the aforementioned factors. These risks, as well as other risks related to the proposed IAA transaction, are included in the Registration Statement (as defined below) and joint proxy statement/prospectus filed with the Securities and Exchange Commission (the "SEC") and applicable Canadian securities regulatory authorities in connection with the proposed IAA transaction. While the list of factors presented here is, and the list of factors presented in the Registration Statement are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties.   

For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to RBA's and IAA's respective periodic reports and other filings with the SEC and/or applicable Canadian securities regulatory authorities, including the risk factors identified in RBA's most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and IAA's most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. The forward-looking statements included in this communication are made only as of the date hereof. Neither RBA nor IAA undertakes any obligation to update any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made, except as required by law.

No Offer or Solicitation

This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.  

Important Additional Information and Where to Find It

In connection with the proposed IAA transaction, RBA filed with the SEC and applicable Canadian securities regulatory authorities a registration statement on Form S-4 to register the common shares of RBA to be issued in connection with the proposed IAA transaction on December 14, 2022 (the "Initial Registration Statement"), as amended by Amendment No. 1 and Amendment No. 2 to the Initial Registration Statement filed with the SEC and applicable Canadian securities regulatory authorities on February 1, 2023 and February 9, 2023, respectively (together with the Initial Registration Statement, the "Registration Statement"). The Registration Statement was declared effective by the SEC on February 10, 2023. The Registration Statement includes a joint proxy statement/prospectus which will be sent to the shareholders of RBA and stockholders of IAA seeking their approval of their respective transaction-related proposals. Each of RBA and IAA may also file other relevant documents with the SEC and/or applicable Canadian securities regulatory authorities regarding the proposed IAA transaction. This document is not a substitute for the proxy statement/prospectus or Registration Statement or any other document that RBA or IAA may file with the SEC and/or applicable Canadian securities regulatory authorities. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC and applicable Canadian securities regulatory authorities IN CONNECTION WITH THE PROPOSED IAA TRANSACTION OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT RBA, IAA AND THE PROPOSED IAA TRANSACTION. 

Investors and security holders may obtain copies of these documents (when they are available) free of charge through the website maintained by the SEC at www.sec.gov, SEDAR at www.sedar.com or from RBA at its website, investor.ritchiebros.com, or from IAA at its website, investors.iaai.com. Documents filed with the SEC and applicable Canadian securities regulatory authorities by RBA (when they are available) will be available free of charge by accessing RBA's website at investor.ritchiebros.com under the heading Financials/SEC Filings, or, alternatively, by directing a request by telephone or mail to RBA at 9500 Glenlyon Parkway, Burnaby, BC, V5J 0C6, Canada, and documents filed with the SEC by IAA (when they are available) will be available free of charge by accessing IAA's website at investors.iaai.com or by contacting IAA's Investor Relations at investors@iaai.com.

Participants in the Solicitation

RBA and IAA, certain of their respective directors and executive officers and other members of management and employees, and Jeffrey C. Smith and potentially other Starboard employees, may be deemed to be participants in the solicitation of proxies from the stockholders of RBA and IAA in respect of the proposed IAA transaction under the rules of the SEC. Information about RBA's directors and executive officers is available in RBA's definitive proxy statement on Schedule 14A for its 2022 Annual Meeting of Shareholders, which was filed with the SEC and applicable Canadian securities regulatory authorities on March 15, 2022, and certain of its Current Reports on Form 8-K. Information about IAA's directors and executive officers is available in IAA's definitive proxy statement on Schedule 14A for its 2022 Annual Meeting of Stockholders, which was filed with the SEC on May 2, 2022, and certain of its Current Reports on Form 8-K. Other information regarding persons who may be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, including information with respect to Mr. Smith, are contained or will be contained in the joint proxy statement/prospectus and other relevant materials filed or to be filed with the SEC and applicable Canadian securities regulatory authorities regarding the proposed IAA transaction when they become available. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from RBA or IAA free of charge using the sources indicated above.

Non-GAAP Financial Measures 

This communication contains certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow. These non-GAAP financial measures are not calculated in accordance with GAAP and may exclude items that are significant in understanding and assessing a company's financial condition or operating results. Therefore, these measures should not be considered in isolation or as alternatives to financial measures under GAAP. In addition, these measures may not be comparable to similarly-titled measures used by other companies. Further information regarding non-GAAP financial measures is included in the respective SEC filings of RBA and IAA.

Ritchie Bros. Contacts
Investors
Sameer Rathod Vice President, Investor Relations & Market Intelligence
(510) 381-7584
srathod@ritchiebros.com

Media
Barrett Golden / Lucas Pers / Haley Salas
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

_________________________

i Potential opportunities and related information included in this communication are for illustrative purposes only and do not imply future targets, expectations or guidance. Estimates do not incorporate potential costs to achieve or specific timeframes. Reflects illustrative EV / NTM EBITDA range, based on pre-transaction blend at the low end and illustrative ~3.0x re-rating at the high end, informed by both (i) observed historical average blended multiple since IAA spin and (ii) blend of top decile observed EV / NTM EBITDA multiples for RBA and IAA over last twelve-month period ending 4-Nov-2022. Figures are illustrative and un-discounted

ii Leverage ratio represents net debt, calculated as pro forma debt less cash, divided by Adj. EBITDA per company's reported definition, which includes add-backs for share-based payments expense, acquisition-related costs, loss / (gains) on disposition of property plant and equipment, change in fair value of derivatives, and non-recurring advisory, legal and restructuring costs. ~2.0x targeted leverage ratio assumes $110mm run-rate cost synergies

iii Based on mean FactSet consensus as of February 17, 2023

iv Represents value recaptured from amended transaction, comprised of $70mm reduced consideration and $45mm special shareholder dividend

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SOURCE Ritchie Bros. Auctioneers

FAQ

What is the date of the Ritchie Bros. Special Meeting to vote on the IAA acquisition?

The Special Meeting is scheduled for March 14, 2023.

What is the expected value creation per share from the IAA acquisition?

The acquisition is projected to unlock up to $76 in incremental value per share.

How much in cost savings is Ritchie Bros. expecting from the IAA deal?

Ritchie Bros. anticipates at least $100 to $120 million in cost savings.

What are the projected EBITDA growth opportunities from the IAA acquisition?

The projected EBITDA growth opportunities range from $250 to $780 million.

What should shareholders do with the proxy cards for the Ritchie Bros. meeting?

Shareholders are advised to vote 'FOR' all proposals on the WHITE proxy card and discard any green proxy card from Luxor.