Starboard to make $500m strategic investment in Ritchie Bros

Ritchie Bros Auctioneers is a Burnaby, British Columbia-based asset management and disposition company.

  • The investment comprises of $485m of convertible preferred equity and $15m of common shares
  • In November, Ritchie Bros announced a merger agreement with US-based IAA for about $7.3bn
  • In January, the parties agreed to amend the agreement to increase the cash consideration

Starboard Value, a US-based hedge fund, has agreed to a $500 million strategic investment in Ritchie Bros Auctioneers, a Burnaby, British Columbia-based asset management and disposition company.

The investment will take the form of $485 million of convertible preferred equity and $15 million of common shares.

Ritchie Bros, founded in 1958, offers customers end-to-end products for buying and selling used heavy equipment, trucks, and other assets.

Additionally, Starboard CEO Jeffrey Smith will be added to the Ritchie Bros board of directors, subject to required approvals by Ritchie Bros shareholders and IAA shareholders in connection with the company’s pending acquisition of IAA.

A merger agreement with Ritchie Bros and IAA was announced in November, in a stock and cash deal valued at about $7.3 billion, including net debt. IAA is a Westchester, Illinois-based digital marketplace connecting vehicle buyers and sellers.

In January, the parties agreed to amend the agreement to increase the cash consideration. Under the amended agreement, IAA shareholders will receive $12.801 per share in cash and 0.5252 common shares of Ritchie Bros for each share of IAA common stock they own.

“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 Jeffrey Smith, CEO of Starboard, in a statement. “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.”

Goldman Sachs & Co was the lead financial advisor, while Guggenheim Securities served as co-lead financial advisor to Ritchie Bros in connection with the pending acquisition of IAA and the Starboard investment.

Starboard, a New York-based investment adviser, focuses on investing in publicly traded US companies.