The M&A team advised Ritchie Bros. Auctioneers (NYSE: RBA) (TSX: RBA) on its amended terms of their previously announced merger agreement with IAA, Inc. (NYSE: IAA) pursuant to which Ritchie Bros. will acquire IAA in a stock and cash transaction. The amended agreement, which delivers enhanced value to Ritchie Bros. shareholders and increased cash consideration to IAA shareholders, has been unanimously approved by each company's Board of Directors.
Under the terms of the amended agreement, IAA shareholders will receive $12.801 per share in cash and 0.5252 common shares of Ritchie Bros. for each share of IAA common stock they own. The change in consideration mix represents a shift in the cash/stock mix to approximately 29% cash/71% stock from the previous mix of 22% cash/78% stock.
The companies continue to expect to close the transaction in the first half of 2023 subject to approval by Ritchie Bros. shareholders of the issuance of Ritchie Bros. common shares in connection with the transaction and approval of IAA shareholders of the transaction, as well as other customary closing conditions.
Goodwin also advised Ritchie Bros. in its securities purchase agreement with Starboard Value LP and certain of its affiliates (together, "Starboard") pursuant to which Starboard will make a concurrent $485 million convertible preferred equity and $15 million common share investment in Ritchie Bros.
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. 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 completion of the investment by Starboard remains subject to the satisfaction of customary closing conditions, including the filing of articles of amendment for the senior preferred shares, the TSX's acceptance of the proposed terms of the investment, approval of the listing of the common shares on the NYSE and TSX, and receipt of customary closing deliverables.