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Merger Arbitrage Mondays – IAA Signs An Agreement To Be Acquired By Ritchie Bros.

  • November 14, 2022

Merger activity increased last week with six new deals announced, one deal completed and two terminated. One of the three new deals announced was a potential deal in the works.

IAA, Inc. (IAA) to be acquired by Ritchie Bros. Auctioneers Incorporated (RBA)

IAA (Insurance Auto Auctions) a digital marketplace for vehicle buyers and seller, was the salvage auction business unit of KAR Auction Services (KAR). It was spun out of KAR on June 28, 2019, to operate the pre-separation salvage auction businesses of KAR, primarily comprised of Insurance Auto Auctions in the United States, Impact Auto Auctions in Canada and HBC Vehicle Services Limited in the United Kingdom, which were later rebranded into the global IAA brand.

We added IAA as a potential deal in the works on March 15, 2022, when Ancora Holdings issued a letter to IAA’s Board stating the need for a leadership change or a sale process. Ancora said, “We estimate a takeout price of $55 or more is achievable based on a trailing 12-month EBITDA of 15.5x and an analysis of peers’ valuations and precedent transactions. At this point, a sale seems like the best risk-adjusted path forward for stockholders.

On November 7, 2022, IAA entered into a definitive agreement with Ritchie Bros. Auctioneers Incorporated, under which it will be acquired by Ritchie Bros. for approximately $7.3 billion including the assumption of $1.0 billion of net debt in a cash plus stock deal. Upon completion of the transaction, Ritchie Bros. stockholders will own approximately 59% of the combined company and IAA stockholders will own approximately 41%.

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