Ritchie’s shareholders of Canada support deal with IAA

According to an early count, Ritchie Bros (NYSE:RBA) Auctioneers of Canada reported on Tuesday that its shareholders approved its $7 billion acquisition of American car dealership IAA (NYSE:IAA) Inc.

The cash-and-stock agreement, which was initially unveiled in November, has grown in popularity this year in the United States.

Ritchie’s shareholders, including Luxor Capital Group and Eminence Capital, opposed the deal.

Institutional Shareholder Services and Glass Lewis, two proxy consulting companies, both advised shareholders to vote against the purchase due to potential risks. Yet, earlier this month, proxy firm Egan-Jones Proxy Services advised in favour of the purchase.

On January 23, Ritchie Bros increased the cash portion of its offer to acquire IAA by 28%, valuing the American auto retailer at $5.94 billion. Ritchie Bros also won the support of a significant IAA shareholder who had expressed concerns about the initial offer.

Each share of IAA common stock will be exchanged for 0.5252 Ritchie Bros common shares, or $12.80, and a share of cash.

Upon completion of the deal, IAA stockholders will own 37.2% of the combined company and Ritchie’s shareholders the remaining 62.8%.

For Ritchie Bros, which auctions and sells used heavy industrial equipment, the acquisition is intended to diversify its customer base, giving it a bigger footprint in vehicle re-marketing, and help cut costs.

IAA stock rose 1.8% to $40.9 on Tuesday, while Ritchie Bros stock rose 0.7% to $54.8 and was listed on the American stock exchange.