Ritchie Bros Auctioneers Inc.’s chief executive officer took aim at one of the company’s largest investors, saying Luxor Capital Group’s opposition to a planned acquisition is based on “aggressive forecasts” and faulty math.
(Bloomberg) — Ritchie Bros Auctioneers Inc.’s chief executive officer took aim at one of the company’s largest investors, saying Luxor Capital Group’s opposition to a planned acquisition is based on “aggressive forecasts” and faulty math.
Luxor has launched a proxy fight to stop Ritchie’s $6 billion takeover of auto-salvage company IAA Inc. The New York-based investment firm filed materials last week that urged shareholders to vote against the deal, citing calculations that it says prove Ritchie is far more valuable as a standalone business. Luxor also accused Ritchie executives of manipulating projections for the company’s core business to make them more pessimistic and strengthen the case for the acquisition.
In a draft letter to shareholders seen by Bloomberg, Ritchie CEO Ann Fandozzi said Luxor’s case is “factually incorrect and based on fundamentally flawed analysis.” Luxor is making “unrealistic assumptions” about how much capital Ritchie needs to reinvest to fuel the growth of its current business of selling industrial and construction equipment, she said. Luxor also made a mathematical error when calculating Ritchie’s enterprise value, Fandozzi said, which caused the investment firm to overstate what the stock might be worth if the IAA deal doesn’t happen.
Shareholders of both companies vote on March 14. Representatives for Luxor, which owns about 4% of Ritchie, couldn’t immediately provide comment on Wednesday.
“We think Ritchie is a terrific standalone business. It continues to accelerate, and that’s evidenced by its most recent earnings report,” Luxor President Doug Snyder said in an interview last week. “We think IAA is by itself a troubled asset — and clearly, based on the proxy, there’s no other buyer.”
Ritchie closed at $61.15 in New York on Wednesday, slightly below its last price before it announced the IAA bid in November.
IAA finished the trading session at $41.78. The Ritchie offer is worth nearly $45 a share, based on Wednesday’s closing values.
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