Issues Comprehensive Take Down of the Most Blatantly False and Misleading Claims from the Company’s Investor Presentation Regarding the Value Destructive Merger with IAA
Calls on Ritchie Bros. Board to Acknowledge Apparent Manipulation of Forecasts by Management
Urges Shareholders to Preserve RBA’s Long Term Sustainable Value and Vote on the GREEN Proxy Card AGAINST the Value Destructive IAA Merger
NEW YORK, Feb. 28, 2023 (GLOBE NEWSWIRE) -- Luxor Capital Group, LP (“Luxor”), as the manager of funds owning 4.7 million shares of Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (TSX: RBA) (“RBA” or, “Ritchie Bros.”, or the “Company”), representing approximately 4.2% of the Company’s outstanding shares, announced today that it has released a supplemental presentation addressing various false and misleading statements, and mischaracterizations made by the Company in its recent investor presentation attempting to justify the proposed merger with IAA, Inc. (NYSE: IAA) (the “IAA Merger”).
https://www.luxorcap.com/LuxorRBAVote.pdf
“Luxor has exposed a systematic pattern of manipulation and misstatements, using management’s own words to demonstrate the Board’s complete failure to protect shareholder interests. Said more plainly, we believe that Ritchie Bros. is seeking to deceive shareholders into supporting management’s value-destructive empire-building ambitions. We believe that either the Board woefully misunderstands Ritchie Bros.’s business or is willfully misrepresenting it.
Ritchie Bros. reacted to the groundswell of shareholder opposition with an entrenching and unnecessary financing. It then directly and through its conflicted mouthpiece Ancora, engaged in what appeared to be coordinated attacks against some of the Company’s largest long-term shareholders. Ritchie Bros.’s and Ancora’s outlandish and demonstrably false statements to smear long term shareholders only serve to underscore how desperate the Board and management team are to push through an irredeemably flawed transaction.
Fellow shareholders, we must do what the Ritchie Bros. Board and management team appear unwilling to do. We must assume the mantle of fiduciaries and protect Ritchie Bros. from this flawed and ill-conceived merger with IAA’s challenged second-tier business. We have just two weeks until the shareholder vote, and we urge you to vote against the merger with IAA,” said Doug Snyder, President of Luxor.
In its presentation, Luxor fully refutes the baseless claims and mischaracterizations made by the Company and Ancora Holdings Group, LLC (“Ancora”), including in RBA’s February 22, 2023, presentation. Luxor uses management’s own words to expose a pattern of deception and misrepresentations. The presentation also clearly shows that the IAA Merger is an extremely value destructive deal. The actions of the RBA board of directors (the “Board”) that must be corrected by a NO vote include:
RBA engaged in a last-ditch gambit to condemn its own Original Forecast and Evergreen Commitment to justify a deal whose economics do not work. This was done in direct contradiction of actual results and numerous historical statements. The RBA Board and management are now representing that the Evergreen Commitment they championed for three consecutive years is not trustworthy. They have resorted to insulting their own business yet purport that they can flawlessly execute on US$350-900M of EBITDA “Opportunity” Targets, without acknowledging the risks, cost, and time required to achieve these illusory targets.
RBA had no response to the analysis in Luxor’s February 17, 2023, presentation to shareholders that clearly showed that the economics of the IAA Merger simply do not work. RBA is a dominant, steadily compounding, capital light and deeply established marketplace leader that has only penetrated 2% of its total addressable market. Luxor believes that issuing 72% more RBA shares and adding expensive leverage to RBA’s capital structure in order to acquire IAA’s lower multiple and embattled business, which has no other suitors, creates severe and permanent business and value dilution, and introduces additional business risks, for RBA shareholders. Luxor has provided further detail supporting its original analysis in the presentation.
The IAA Merger inflates RBA management’s compensation, as they are paid more for running a bigger company regardless of the outcome for RBA shareholders. 50% of management’s long term compensation is based on total earnings growth, not earnings per share growth, which incentivizes empire building. A further 50% of management’s long-term compensation is based on FCF per share growth, which incentivizes buying lower multiple, poor-quality businesses. This explains why management would want to do a horribly dilutive deal – they win, even if shareholders lose.
Luxor is not short IAA, nor does it have any agreements, contracts, or other means of expressing that position. Luxor has stated this ‘on the record’ multiple times. Fir Tree has confirmed to Luxor that Fir Tree does not have, and never has had, a short position in IAA. Repeating a lie does not make it true, no matter how many times RBA and its surrogates do so.
Luxor believes RBA is worth far more on a standalone basis than in the proposed IAA Merger. Using RBA’s own DCF assumptions and Original Forecast, the standalone case is clearly superior for RBA shareholders. RBA's standalone business is performing extremely well, in line with the Company's repeatedly reiterated Evergreen Commitment, and is poised to continue outperforming street expectations amidst improving industry conditions.
RBA shareholder reaction to the deal and since the deal announcement, underscores the negative view RBA shareholders continue to hold towards the IAA Merger. RBA stock plummeted -18% on the day the IAA Merger was announced and continues to significantly underperform its peers and broader indices. This significant underperformance has persisted despite Q3 and Q4 earnings substantially exceeding sell-side estimates.
For further information regarding additional key reasons to Vote No on this transaction, please also see our original Feb 17, 2023, presentation, https://www.luxorcap.com/LuxRBA021623.pdf, which details Luxor’s views as to why:
- RBA’s fanciful revenue synergies for the IAA Merger are nonsensical.
- IAA is a second tier, fundamentally challenged business.
- Starboard’s sweetheart deal transfers significant wealth away from RBA shareholders.
Luxor invites its fellow RBA shareholders to review its presentations and join Luxor and many other RBA shareholders in voting the GREEN proxy AGAINST the IAA Merger.
| If you require assistance in voting your GREEN proxy or would like to receive updates, please call Okapi Partners toll-free at + 1 (877) 629-6356 or Shorecrest Group at + 1 (888) 637-5789. After reading the information provided, if you agree that the IAA Merger is not in the best interest of RBA or its shareholders, we urge you to take the time to vote AGAINST using your GREEN proxy card. If you have already voted using the Company’s white proxy card, you have every right to change your vote by using the GREEN proxy card that is being mailed to shareholders of record. Only the latest-dated validly executed proxy that you submit will be counted. Please follow the instructions on the GREEN proxy card to vote using one of the available methods provided. To ensure your vote is counted, we recommend that you vote on the internet where possible, so your vote is received before March 9, 2023 at 5:00 p.m. (Pacific Time). YOUR VOTE IS IMPORTANT IN DETERMINING THE FUTURE OF RITCHIE BROS. |
About Luxor Capital Group, LP:
Luxor Capital Group, LP is a multi-billion-dollar investment manager, which was founded in 2002 and is based in New York. It makes investments through its fundamental, long-term oriented investment process. The firm has an extensive history of investing in global marketplaces businesses.
Luxor Capital Group, LP, LCG Holdings, LLC, Lugard Road Capital GP, LLC, Luxor Capital Partners Offshore Master Fund, LP, Luxor Capital Partners Long Offshore Master Fund, LP, Luxor Capital Partners, LP, Lugard Road Capital Master Fund, LP, Luxor Management, LLC, Christian Leone, and Jonathan Green (collectively, the “Participants”) have filed a definitive proxy statement and accompanying GREEN proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit proxies in connection with a special meeting (the “Special Meeting”) of the shareholders of Ritchie Bros. Auctioneers Incorporated, a company organized under the federal laws of Canada (the “Company”). All shareholders of the Company are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Participants, as they contain important information, including additional information related to the Participants. The definitive proxy statement and an accompanying GREEN proxy card will be furnished to some or all of the Company’s shareholders and will be, along with other relevant documents, available at no charge from the Participants’ proxy solicitors, Okapi Partners LLC by phone at (877) 629-6356 (Toll Free) or by email to info@okapipartners.com, or to Shorecrest Group by phone at (888) 637-5789 (Toll Free) or by email at contact@shorecrestgroup.com. Information about the Participants and a description of their direct or indirect interests by security holdings is contained in the definitive proxy statement filed by the Participants with the SEC on February 13, 2023. This document is available free of charge on the SEC website.
Contacts:
Investor Contacts
Douglas Friedman
Luxor Capital Group, LP
RBA@luxorcap.com
Mark Harnett & Bruce Goldfarb
Okapi Partners LLC
(212) 297-0720
Info@okapipartners.com
Media
Dan Gagnier & Riyaz Lalani
Gagnier Communications
(646) 342-8087
luxor@gagnierfc.com
