By Svea Herbst-Bayliss
NEW YORK (Reuters) – Ancora Group Holdings, a key shareholder in U.S. auto retailer IAA, has accumulated a 0.5% stake in Canada’s Ritchie Bros Auctioneers and is publicly challenging investors who oppose their planned merger, according to documents seen by Reuters.
Activist investor Ancora, which has successfully pushed for change at companies including retailer Kohl’s and toymaker Hasbro, last month threw its weight behind the tie-up after Ritchie Bros amended the terms.
Ritchie Bros recut the deal, valued at nearly $6 billion, to include more cash for IAA shareholders and reduced the dilution for Ritchie Bros shareholders.
Activist investment firm Starboard Value LP agreed to make a $500 million preferred investment in Ritchie Bros and the firm’s chief, Jeffrey Smith, will join the board. Ancora will also have its representative on the combined board.
Shareholders of both companies have to approve the deal at special meetings on March 14.
In the coming days both sides will present their case to proxy advisory firms ISS and Glass Lewis, which will make recommendations on how shareholders should vote.
In the presentation seen by Reuters, Ancora supported Ritchie Bros chief Ann Fandozzi and took aim at hedge fund Luxor Capital Group, a vocal opponent of the deal.
Luxor has said the deal it would distract Richie Bros from its core business of selling heavy equipment and hurt shareholders.
Ancora called Luxor’s analysis “misinformed” and said its interests were “seemingly misaligned”. Ancora noted that Luxor’s Ritchie Bros stake doubled over the past three months while “short interest in IAA was increasing in parallel.”
This week, Luxor disclosed in a regulatory filing an agreement with hedge fund Fir Tree Capital Management LP that entitles it to a “trade incentive fee” pertaining to investments in the auto companies.
Fir Tree has become a prominent short seller and last year made a public bet against crypto coin Tether.
Representative for Luxor and Fir Tree could not be immediately reached for comment.
In recent weeks, shareholders on both sides of the deal have expressed their views. Janus Henderson Investors has come out against the deal while Eagle Asset Management and Independent Franchise Partners have lined up alongside Ancora to support it.
Ancora’s hedge fund unit, led by James Chadwick, has become a top activist investor in recent years. In 2022, it secured board seats at C.H. Robinson Worldwide, Mueller Water Products and Berry Global and pushed IAA to sell itself.
(Reporting by Svea Herbst-Bayliss; Editing by Jamie Freed)