One of the largest shareholders of IAA Inc. plans to vote against the company’s sale to Ritchie Bros. Auctioneers Inc., arguing that the price is too low and the deal doesn’t make strategic sense.
Discerene Group LP, holder of around 3.6 per cent of IAA shares, says the sale process “was fundamentally flawed and flies in the face of good corporate governance,” according to a letter to the board seen by Bloomberg News. IAA directors didn’t do enough to seek out other buyers, and at the price Ritchie is offering, the company would be better off staying independent, the investment firm said in the letter.
“The sale will force IAA shareholders to assume significant execution risks with an unproven management team, including the risks of attempting to integrate two very different businesses in very different industries and with very different business cultures,” Stamford, Connecticut-based Discerene Group said in the letter. “These attempts seldom end well.”
Ritchie shareholders would own 59 per cent of the merged company, IAA holders 37 per cent and Starboard just less than 4 per cent on an as-converted basis.
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