Ritchie Bros. Mails Letter To Shareholders Regarding IAA Acquisition; Urges All Shareholders To Vote "For" All Proposals Listed On The White Proxy Card

Author: Happy Mohamed | March 06, 2023 10:00am

Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) (TSX:RBA) ("Ritchie Bros.") today issued the following letter reinforcing the outstanding value creation opportunity presented by the acquisition of IAA, Inc. (NYSE:IAA) ("IAA") and highlighting support the Company is receiving from many shareholders and independent third-party industry analysts.

The Company's Special Meeting of Shareholders to vote on proposals necessary to complete the IAA acquisition is scheduled for March 14, 2023. The letter, which is also being mailed to shareholders, and additional materials related to the Special Meeting can be found at www.RBASpecialMeeting.com.

March 3, 2023

Dear Ritchie Bros. Shareholders,

We are writing to reinforce the outstanding value creation opportunity presented by the acquisition of IAA. Despite this significant upside opportunity, Luxor Capital Group continues to repeat distorting assertions in their attempt to derail the Ritchie Bros. + IAA combination. We note that while Luxor owns shares today, Luxor sold out of all of its Ritchie Bros. shares in the first quarter of 2022i. We do not believe Luxor's interests are aligned with the interests of Ritchie Bros.' long-term shareholders.

We have received strong support for the IAA acquisition from many of our shareholders, both privately and publicly – including Independent Franchise Partners, Eagle Asset Management and Vontobel Asset Management, who are among our largest shareholders – as well as from independent third-party industry analysts and other stakeholders. Stakeholders recognize the outstanding strategic and financial benefits and substantial, sustainable shareholder returns the transaction is expected to generate.

The numbers do indeed tell a compelling story, including:

• • $350 million to $900 million total estimated potential EBITDA opportunity comprisingii:
    • $100 million to $120 million in expected cost savings
    • $250 million to $780 million in potential incremental EBITDA growth from revenue opportunities
    • Taken together, this EBITDA opportunity represents up to an additional $76 per shareiii in potential value comprising:
      • Up to $61 per share of potential value from cost savings and incremental revenue opportunities at the pre-transaction blended multiple
      • Up to $15 per share of potential value from multiple expansion to the average IAA - Ritchie Bros. blended multiple since IAA spin
  • $14.3 billion in gross transaction value (GTV)iv, more than doubling Ritchie Bros.' GTV as of year-end 2022
  • $2.5 billion of estimated cumulative free cash flow from 2023 to 2026v

Ritchie Bros.' leadership team is proven and has the right experience to successfully execute on this transactionvi.

• • "We've got a lot of confidence in Ann. We think based on her success and her strategic initiatives that she put in place already, that she deserves the opportunity to execute on this." – Eric Mintz, managing director of small cap growth and mid cap growth portfolios at Eagle Asset Management, Reuters, January 30, 2023
    
    
     
  • "Both Ritchie CEO Ann Fandozzi and COO Jim Kessler know the automotive business very well, having served at ABRA Auto Body and Glass, as CEO and COO, respectively… IAA gets a top management team with experience in the industry who would be an excellent team to oversee the turnaround and integration of IAA." – Kenneth Squire, 13D Monitor, January 26, 2023
    
    
     
  • "We believe the merger will lead to significant upside in the share price in the next couple of years." – Scotiabank, February 9, 2023
    
    
     
  • "We see a path to $100 [share price for RBA] over the next several years if management executes well. We like what RBA brings to IAA… and what IAA brings to RBA." – Northcoast Research, January 27, 2023

Luxor's flawed and self-serving comments maligning Ritchie Bros.' management team are unjustified, misplaced and detract from value creation.

The Ritchie Bros. management team, under the oversight of the Ritchie Bros. Board of Directors, has transformed the Company's business and delivered exceptional, superior returns for shareholders – in particular, a 48% shareholder return, outperforming all relevant indicesvii.

The Board and management team have always prioritized shareholders' best interests. We view the IAA acquisition as the next logical step in a transformative strategy that has created substantial shareholder value.

Personal attacks on Ritchie Bros.' proven team who have a record of execution are unwarranted. Luxor's attempt to derail the Company's current strategy – which even Luxor concedes is working – is based on flawed analysis and ongoing misleading statements. If the IAA transaction is not approved as Luxor is seeking, we believe there is a significant risk of value destruction, and the Company's future growth could be compromised.

Detailed information correcting Luxor's distortions and flawed analysis is available in the Company's February 22, 2023 presentation, which is available at www.RBASpecialMeeting.com.

Time Is Short. Vote Electronically by Internet or Telephone Prior to March 10, 2023 to Be Sure Your Vote Is Received in Time to Be Counted

Please Vote Now on the WHITE Proxy Card!

As we continue to progress towards completing the transaction with IAA, we want to remind shareholders what's at stake: a unique opportunity to accelerate our strategy and create a long runway for significant, sustainable value creation. With integration planning well underway, we are ready to hit the ground running upon the transaction's close to begin realizing the substantial upside potential generated by the Ritchie Bros. + IAA combination.

We urge you to support your management team and Board as we embark on this important next step by voting "FOR" on the WHITE proxy card for all proposals being considered at the Special Meeting. Any green proxy card should be discarded. If you have voted your shares on the green proxy card, you can simply change your vote by voting on the WHITE proxy card.

Sincerely,

/s/ Ann Fandozzi

Ann Fandozzi

CEO

Posted In: IAA RBA TSX:RBA