IAA sells lightly damaged, salvage and clear-title vehicles, parts cars, SUVs, trucks, motorcycles, and heavy equipment at auctions across the U.S. - File photo: IAA

IAA sells lightly damaged, salvage and clear-title vehicles, parts cars, SUVs, trucks, motorcycles, and heavy equipment at auctions across the U.S.

File photo: IAA

Ritchie Bros. Auctioneers and IAA (Insurance Auto Auctions) Inc. announced Nov. 7 that they have entered into a definitive agreement under which Ritchie Bros. will acquire IAA in a stock and cash transaction valued at about $7.3 billion including the assumption of $1 billion of net debt.

The transaction has the unanimous support of both boards of directors. Under the terms of the merger agreement, IAA stockholders will receive $10 in cash and 0.5804 shares of Ritchie Bros. common stock for each share of IAA common stock they own. The purchase price of $46.88 per share represents a premium of about 19% to the closing share price of IAA common stock on Nov. 4, 2022, and 23% to the 10-day volume-weighted average price, using Ritchie Bros.' 10-day volume-weighted average price on the NYSE of $63.55.The total purchase price also reflects a transaction multiple of 13.6x IAA's last 12-month Adjusted EBITDA3 as of Oct. 2, 2022. Upon completion of the transaction, Ritchie Bros. stockholders will own about 59% of the combined company and IAA stockholders will own about 41%.

The transaction is expected to close in the first half of 2023 subject to approval by Ritchie Bros. stockholders of the issuance of Ritchie Bros. stock in connection with the transaction and approval of IAA stockholders of the transaction, receipt of regulatory approvals and other customary closing conditions.

IAA is a leading global digital marketplace connecting vehicle buyers and sellers, and the transaction will diversify Ritchie Bros.' customer base by providing the company with a significant presence in the vehicle remarketing vertical that has strong industry fundamentals with proven secular growth.

The combination will accelerate its growth and strategic vision to create a next-generation global marketplace for commercial assets and vehicles, supported by advanced technologies and data analytics.Additionally, the Ritchie Bros. management team has extensive experience in the automotive and insurance ecosystem, which will help shape the go-forward customer experience. With enhanced scale and an expanded addressable market, Ritchie Bros. will be able to drive additional Gross Transaction Value ("GTV") growth through its platforms and auction sites, in turn generating more insights for its customers and expanding the adoption of Ritchie Bros.' other high-margin tech-enabled services.

Primary Strategic and Financial Benefits

  • Combining Ritchie Bros. and IAA's product offerings immediately creates a leading global marketplace for commercial assets and vehicles. The combined company's increased scale will allow it to build out its integrated digital marketplace.
  • The transaction represents Ritchie Bros.' entry into the large and steadily growing vehicle sector. IAA is an established market leader, delivering annual GTV of about $8.6 billion. It is one of the most trusted brands in the industry, with long-standing customer relationships. Adding a successful business in a new vertical will diversify Ritchie Bros.' business by both customer and geography and create a more resilient business model to perform through market cycles.
  • By combining IAA's footprint of more than 210 facilities across the U.S, Canada and Europe with Ritchie Bros.' footprint of over 40 owned and 24 leased facilities globally, the combined company will have new opportunities to advance its yard strategy more efficiently in key regions across the United States and internationally. The expanded real estate base will provide the company with additional flexibility to drive profitable growth by strategically leveraging capacity to best serve customers across both businesses. This includes leveraging Ritchie Bros.' footprint to expand IAA's broader capacity, including for catastrophic weather events. The combined real estate footprint also increases Ritchie Bros.' proximity to a broader customer base and local yards, allowing it to provide faster service and reduce transportation time and costs, enhancing the overall experience for customers.
  • This combination brings together the best capabilities of both Ritchie Bros. and IAA. Marketplace technology investments are expected to drive enhanced returns as they will be amortized over many more units. Moving forward, the combined company will offer expanded access to additional insights, services, and transaction solutions to a wider customer base.
  • The companies expect to achieve $100 to $120+ million in annual run-rate cost synergies by the end of 2025, driven primarily through consolidating back office, finance and technology, general and administrative, and operations.
  • The transaction is expected to be accretive to Ritchie Bros.' adjusted earnings per share by low single digits in the first full year following the transaction close and mid-teens accretive after that.

Integration Plan, Leadership and Board of Directors

Ann Fandozzi will continue to serve as CEO of the combined company.

The Ritchie Bros. Board of Directors will expand to add IAA CEO and President John Kett and three other current members of the IAA Board following the close of the transaction. Erik Olsson, chairman of the Ritchie Bros. Board, will serve as chairman of the Board of the combined company.

Ritchie Bros. will continue to be legally incorporated in Canada and will retain its offices and employee base in Burnaby, British Columbia and IAA's Chicago, Illinois offices will serve as the official headquarters of the combined company. As of the transaction closing, about two thirds of the workforce will be in the U.S. on a combined basis.

Following the transaction close, Ritchie Bros. will continue to trade under the symbol RBA on both the NYSE and TSX.

Ritchie Bros. intends to fund the cash consideration of the transaction through a combination of cash on hand and new debt. The company has bridge financing commitments in place from Goldman Sachs, Bank of America, and Royal Bank of Canada. Ritchie Bros. also intends to maintain its current quarterly dividend of 27 cents per share and will consider future increases as the company de-levers its balance sheet.

Originally posted on Vehicle Remarketing

About the author
News/Media Release

News/Media Release


Our editorial staff has selected and edited this news release for clarity and brand style because we believe it is relevant to our audience.

View Bio