Ritchie Bros. announces $500M investment from Starboard Value

Ritchie Bros. announced that it has entered into a securities purchase agreement with Starboard Value LP and certain of its affiliates pursuant to which Starboard will make a concurrent $485M convertible preferred equity and $15M common share investment in Ritchie Bros. In connection with the investment, Starboard CEO Jeffrey Smith will be appointed to the Ritchie Bros. Board of Directors effective following the later of the required approvals by Ritchie Bros. shareholders and IAA shareholders in connection with the company’s pending acquisition of IAA, Inc. Under the terms of the securities purchase agreement, Starboard has agreed to purchase $485 million of newly issuable senior preferred shares of Ritchie Bros., convertible into common shares with an initial conversion price of $73.00 per share, representing a premium of approximately 23% over Ritchie Bros.’ volume-weighted average price over the 10 trading day period ending on January 20, 2023. The preferred shares will carry an initial 5.5% preferred dividend, which is payable in cash or in shares at the company’s option, and will also be entitled to participate on an as-converted basis in the company’s regular quarterly common share dividends. Concurrently, Starboard has also agreed to purchase approximately $15 million of common shares in Ritchie Bros. at a purchase price of approximately $59.72 per share. The shares underlying Starboard’s investment will not be voted at the Special Meeting of Ritchie Bros. Shareholders to be held with respect to the IAA transaction. In the event that the merger between Ritchie Bros. and IAA is terminated, the company will have the right to redeem the preferred shares at a redemption price of 102% of par plus accrued and unpaid dividends.