Janus joins Luxor in opposing Ritchie Bros bid for IAA
TORONTO, Jan 30 (Reuters) - Janus Henderson Investors on Monday became the second investor in Canada's Ritchie Bros Auctioneers to publicly come out against the company's planned acquisition of IAA Inc.
Ritchie Bros on Jan. 23 sweetened the cash component of its buyout offer for IAA by 28%, valuing the U.S. auto retailer at $5.94 billion, and also secured the backing of a key IAA shareholder that had questioned the initial offer.
The initial offer in November valued IAA at $7.3 billion, including debt.
"We have significant misgivings about the strategic and financial rationale for this deal, and think the structure and timing are concerning," two Janus Henderson portfolio managers and an analyst said in a letter to the Ritchie Bros Board of Directors included in a securities filing.
The investors said they are "strong believers" in the existing business and in the company's vision of becoming a one-stop shop for heavy equipment owners.
"While we see some strategic merits to the merger, specifically synergies with the real estate footprint and some ability to share technology, we do not believe they are sufficient to justify the risk associated with the transaction," they said.
Ritchie Bros did not respond to immediate requests for comment.
The letter added that Janus Henderson, which owns a 3.44% stake in Ritchie Bros according to Refinitiv Eikon data, and has held the stock continuously for over 10 years, intends to vote against the transaction.
IAA shares opened down 1.14% on Monday, while Ritchie Bros' Toronto-listed shares were up 0.41%.
Investment firm Luxor Capital Group, which owns 3.6% of the Ritchie stock, has been a vocal opponent of the deal, and last week reiterated it was against the transaction after the proposed restructuring of the offer.
"Luxor believes that the 'revised' IAA merger has done little to change the financial terms for (Ritchie Bros) shareholders," the firm said in its latest letter. (Reporting by Maiya Keidan Editing by Bill Berkrot)