Rb Global, Inc. · TSX:RBA
Rb Global — Ritchie Bros. Auctioneers — Proxy Contest (February 2023)
137 slides from Rb Global's proxy contest presentation, Feb 17, 2023
Slide 1: RBA Shareholder Presentation February 2023
STRICTLY CONFIDENTIAL. NOT FOR PUBLIC DISTRIBU TION. RBA SHAREHOLDER PRESENTATION FEBRUARY 2023
Slide 2: Disclaimer
DISCLAIMER 2 This presentation and any of the information contained herein (this “Presentation”) is for discussion and general informational purposes only, and is not complete. This Presentation does not have regard for the specific investment objective, financial situation or the particular need of
Slide 3: Agenda
3 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responded
Slide 4: Luxor Capital Group and Lugard Road overview
• Lugard Road has generated strong net returns since inception, underpinned by an intensive research-driven approach • The fund focuses on marketplaces, as well as a handful of other investment subsectors ─ Participated as a director or observer on over a dozen boards of marketplace companies in the
Slide 5: A selection of marketplaces we have invested in
A SELECTION OF MARKETPLACES WE HAVE INVESTED IN 5 We seek to find best in class marketplaces on a global basis and become both long-term investors and good partners to management teams Note: The above graphic displays historical positions for the Fund, not all of which currently remain in the portfo
Slide 6: Close relationships with management
CLOSE RELATIONSHIPS WITH MANAGEMENT WE SEEK LONG-TERM COLLABORATIVE RELATIONSHIPS WITH MANAGEMENT TEAMS, TO SUPPORT THEM IN ANY WAY THAT WE CAN TO BUILD LONG-TERM SHAREHOLDER VALUE, AS INDICATED BY THE BELOW 6 “The Luxor team has been constructive at every turn. They have made introductions that wer
Slide 7: RBA is fantastic on a standalone basis
7 RBA IS FANTASTIC ON A STANDALONE BASIS • RBA is an unusually attractive and deeply undervalued business with a dominant market position built over many decades • The power of this market position has allowed RBA to compound in value at 13.9% since listing in March 1998 as compared to the S&P 500 a
Slide 8: The resounding criticism from shareholders – vote no
8 THE RESOUNDING CRITICISM FROM SHAREHOLDERS COULD NOT BE CLEARER – VOTE NO “We have significant misgivings about the strategic and financial rationale for this deal, and think the structure and timing are concerning. Based on our current understanding and the current deal terms, it is our intention
Slide 9: The market has made its distaste for the deal known
(1) Comparable set from J.P. Morgan in RBA merger proxy filing. No other bank provided RBA comparable companies. “2022 Proxy Statement Peer Group” refers to the peers listed in RBA’s 2022 proxy statement filing All prices as of Feb 14th, 2023 9 THE MARKET HAS MADE ITS DISTASTE FOR THE DEAL KNOWN 80
Slide 10: Deal lacks strategic rationale
10 DEAL LACKS STRATEGIC RATIONALE Management’s Rationale The Reality RBA receives scale and diversification • Diversification into unrelated industries destroys value by introducing a HoldCo discount ranging from 10-25% • Scale for the sake of itself is not valuable in marketplace businesses, it is
Slide 11: RBA management's changing tune on deal rationale
RBA MANAGEMENT’S CHANGING TUNE ON DEAL RATIONALE IN THE FACE OF SHAREHOLDER OPPOSITION 11 Nov 7th Nov 21th Dec 5th Dec 19th Jan 2nd Jan 16th Jan 30th Feb 14th (Nov 7th) Deal announced – “scale” (18 mentions) and “diversification” (8 mentions) given as primary deal rationale on Q3 earnings call (Dec
Slide 12: Fabricated forecast used by RBA management
12 FABRICATED FORECAST USED BY RBA MANAGEMENT TO MANIPULATE AND SHORTCHANGE RBA INVESTORS • RBA’s original financial projections for the IAA Merger were created in August 2022, and lined up with the low end of the Company’s publicly stated financial forecast • At the ‘eleventh hour’, after the deal
Slide 13: Management's attempt to force the deal through
13 MANAGEMENT’S ATTEMPT TO FORCE THE DEAL THROUGH IN THE FACE OF SHAREHOLDER REJECTION • Instead of listening to shareholder’s concerns, RBA management and Board attempted to force the deal through by purchasing the hollow endorsement of Starboard Value LP • Starboard was issued a grossly above-mark
Slide 14: No one wanted to buy IAA
14 NO ONE WANTED TO BUY IAA IAA HAD A ‘FOR SALE SIGN’ OUTSIDE ITS DOOR FOR THE PAST YEAR AND RBA WAS THE ONLY PARTY THAT SHOWED UP Party Evidence Reality IAA Board Private Equity Strategic Acquirers • Once understanding the standalone operating prospects for the business, the IAA Board rushed to sel
Slide 15: Vote No
15 VOTE NO • RBA is a dominant and materially undervalued business and is better off alone • RBA plummeted -18% on the day of the deal announcement and its share price has materially underperformed both its peers and the broader indexes since then • Numerous, typically non-vocal, long-term sharehold
Slide 16: Agenda
16 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responde
Slide 17: Summary: RBA is a long-term winner
SUMMARY: RBA IS A LONG-TERM WINNER 17 • RBA has a dominant market position in the used heavy equipment and commercial asset market, with no considerable #2 player to speak of • This position was built over many decades with RBA’s auctions attracting more sellers and buyers, and the power of that net
Slide 18: Overview of Ritchie Brothers
18 OVERVIEW OF RITCHIE BROTHERS RBA Has a Dominant Network That Provides A Wide Moat Around the Business RBA Stats and Facts • RBA connects buyers and sellers of used equipment and commercial assets through its brands including; Ritchie Brothers, IronPlanet, GovPlanet, SalvageSale, Ritchie’s List, a
Slide 19: RBA has a dominant market position
RBA HAS A DOMINANT MARKET POSITION BEING THE DOMINANT NUMBER #1 IS AN ENORMOUS ADVANTAGE IN MARKETPLACES 19 The Importance of Number One In Network Markets “Having a leadership position is crucial in the marketplace business… If two companies are close to having an equal size, both competitors have
Slide 20: RBA materially benefited from COVID
RBA MATERIALLY BENEFITED FROM COVID 20 RBA Stock Price(1) How COVID Has Benefited RBA’s Business COVID permanently reduced RBA’s cost structure, driving a one-time re-rating of the stock • COVID re-wrote the rules for how RBA’s auctions operated from live events to entirely online • COVID removed co
Slide 21: RBA has enormous addressable market potential to unlock
RBA HAS ENORMOUS ADDRESSABLE MARKET POTENTIAL TO UNLOCK 21 • With $6B of GTV out of a total $300B in its core Heavy Equipment Disposition TAM, RBA is only ~2% penetrated, with a long runway for growth; the monetization of services represents an additional opportunity in the hundreds of billions of d
Slide 22: Attacking the addressable market
ATTACKING THE ADDRESSABLE MARKET 22 • Satellite Yards – Ritchie can expand its use of small, inexpensive, conveniently located yards to pool inventory from virtual auctions, which reduces cost of logistics and drives incremental sales due to ease of use for customers • Ritchie List – Launched in Q4
Slide 23: These initiatives drive the management Evergreen metrics
THESE INITIATIVES DRIVE THE MANAGEMENT EVERGREEN METRICS 23 • The sum total of all RBA initiatives reflects itself in the Company’s Evergreen Metrics for future financial performance • Ritchie Brothers’ management has discussed its Evergreen Metrics guidance many times throughout the last three year
Slide 24: Q1 2023 listing volumes benefiting from normalization
24 • So far in Q1 2023, listing volumes are continuing to benefit from normalization of macro trends: • GTV at non-Ritchie Auctions are up +26% Y/Y ─ Ritchie Auctions don’t begin in earnest until mid-February • Ritchie Auction Listings are up +34% Y/Y QTD vs. the same quarter last year • Orlando Auc
Slide 25: RBA valuation vs. marketplace peers
RBA VALUATION VS. MARKETPLACE PEERS 25 Note: All comparable companies above use consensus sell-side estimates in future years. RBA financials use projections consistent with company Evergreen guidance. RBA peer group includes Auctions Technology Group, AutoTrader, Baltic Classifieds, CarSales, Copar
Slide 26: The value of RBA stock on standalone basis
Guggenheim DCF RBA Fairness Opinion Value Guggenheim DCF Pro Forma Fairness Opinion Value RBA Nov 4th Stock Price THE VALUE OF RBA STOCK ON STANDALONE BASIS BY ANY MEASURE, RBA IS WORTH SIGNIFICANTLY MORE THAN THE PRICE AT WHICH MANAGEMENT WANTS TO SELL EQUITY 26 $60 $70 $80 $90 $100 $110 $120 $130
Slide 27: Summary: RBA is better off alone
SUMMARY: RBA IS BETTER OFF ALONE 27 • RBA’s flywheel has been spinning for decades allowing the Company to develop their dominant position today in the used commercial and heavy equipment asset space • RBA has a long runway of growth through expanding many long-term adjacencies such as financing and
Slide 28: Agenda
28 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responde
Slide 29: Summary: IAA is a long-term loser
SUMMARY: IAA IS A LONG-TERM LOSER 29 • IAA is stuck in a seven-year trend of ceding market share to its larger, better positioned, and better run competitor Copart • While IAA had its business bled dry for dividends by its former parent KAR, Copart re-invested heavily in its business to gain a compe
Slide 30: IAA overview
IAA OVERVIEW 30 Note: All FY22 figures noted above are based on IAA press release on Feb 13th, 2023 with preliminary FY results. Source: Company Presentations. Yipitdata. • IAA is a marketplace for connecting buyers and sellers of primarily salvage vehicles • Its supply of vehicles comes from insura
Slide 31: Nobody wants to own IAA (I/II)
NOBODY WANTS TO OWN IAA (I/II) THE PROXY STATEMENT MAKES IT CLEAR THAT OTHER POSSIBLE PARTIES REJECTED IAA 31 Party Evidence What Shareholders Should Ask Themselves IAA Board Private Equity Strategic Acquirers “On July 22, 2021, the IAA board held a meeting with IAA management to discuss strategy ma
Slide 32: Nobody wants to own IAA (II/II)
NOBODY WANTS TO OWN IAA (II/II) THE PROXY STATEMENT MAKES IT CLEAR THAT OTHER POSSIBLE PARTIES REJECTED IAA 32 Party Evidence Implication Starboard Ancora “Ritchie Bros. Auctioneers Incorporated today announced that it has entered into a securities purchase agreement with Starboard Value LP…pursuant
Slide 33: Copart vs IAA is not a fair fight
COPART VS IAA IS NOT A FAIR FIGHT 33 Copart has more buyers, more sellers, a stronger network effect, a stronger balance sheet, far more EBITDA to invest out of, an advantage cost structure from owning their land, and an experienced management team Source: CapitalIQ as of 2/15/2023. 1) Employees as
Slide 34: IAA market share over time
IAA MARKET SHARE OVER TIME COPART, THE NUMBER #1 PLAYER, HAS BEEN EATING IAA’S LUNCH FOR OVER HALF A DECADE 34 IAA has been bleeding market share to a much larger Copart for many years 35% 40% 45% 50% 55% 60% 65% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q
Slide 35: Copart vs. IAA indexed volumes over time
100 110 120 130 140 150 160 170 2015 2016 2017 2018 2019 2020 2021 LTM 2022 Copart vs. IAA Indexed Volumes IAA CPRT COPART VS. IAA INDEXED VOLUMES OVER TIME USING PUBLICLY DISCLOSED UNIT VOLUME GROWTH DATA FROM EACH COMPANY, IT IS CLEAR THAT IAA HAS LOST SHARE TO COPART FOR SEVEN CONSECUTIVE YEARS 3
Slide 36: Copart vs. IAA share of unique visitors
COPART VS. IAA SHARE OF UNIQUE VISITORS COPART NOW HAS ~3X THE NUMBER OF UNIQUE VISITORS AS IAA 36 • Analysis of Copart U.S. and IAA global website traffic data shows that Copart U.S. has nearly 3x the number of unique website visitors as IAA globally • Nearly half (42%) of IAA’s unique website visi
Slide 37: IAA has severely lacked reinvestment
IAA HAS SEVERELY LACKED REINVESTMENT 37 (1) IAA cash flow is cumulative for the 27 consecutive quarters from Mar-16 to Sep-22. CPRT cash flow is cumulative for the 27 consecutive quarters from Apr-16 to Oct-22. Source: SEC Filings. • Copart has invested ~4x the amount of capex into its business vs.
Slide 38: IAA requires enormous investment to regain competitiveness
IAA REQUIRES ENORMOUS INVESTMENT TO REGAIN COMPETITIVENESS 38 • “But IAA leases their yards, where their competitors typically owns yards as does Ritchie Bros, by the way, we own our yards. So that's first and foremost. To the extent we think that owning yards is a better use of capital than leasing
Slide 39: IAA lacks the ability to keep up with Copart's investments
IAA LACKS THE ABILITY TO KEEP UP WITH COPART'S INVESTMENTS 39 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E EBITDA - Copart Relative to IAA $000mm $200mm $400mm $600mm $800mm $1,000mm $1,200mm EBITDA Gap Between Copart and IAA • Copart’s EBITDA is no
Slide 40: IAA and GEICO
IAA AND GEICO IAA MANAGEMENT HAS A POOR RECORD IN PREDICTING THE END OF SHARE LOSSES FROM MAJOR CUSTOMERS 40 0% 5% 10% 15% 20% 25% IAA Volumes - GEICO Mix “There have been some volume shifts, which include a top 3 customer, who is shifting about 30% of their volume away from IAA to diversify their b
Slide 41: IAA and State Farm
IAA AND STATE FARM IAA FACES AN EXISTENTIAL THREAT IN LOSING OTHER TOP SUPPLIERS 41 IAA was dead wrong about the extent of GEICO volume losses – why should RBA shareholders believe there is visibility with other carriers? State Farm Inventory Additions Went To Zero in 2 States in Nov-22 IAA Manageme
Slide 42: IAA performance excluding GEICO
IAA PERFORMANCE EXCLUDING GEICO 42 (1) “Market” in legend is defined as the sum of all Copart and IAA volumes. Source: Yipitdata. • Both RBA management and investors supportive of the deal have cited IAA’s market outperformance when excluding losses from GEICO • It strikes us as conveniently mislead
Slide 43: Continued customer losses have driven higher concentration
CONTINUED CUSTOMER LOSSES HAVE DRIVEN HIGHER CONCENTRATION IN RESPONSE TO LOSS OF GEICO VOLUMES, IAA HAS SIGNIFICANTLY INCREASED ITS CONCENTRATION W/ PROGRESSIVE 43 0% 5% 10% 15% 20% 25% 30% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 44: Industry margins have benefited from rising selling prices
2000 2500 3000 3500 4000 4500 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Copart Salvage Cars ASPs ($) INDUSTRY MARGINS HAVE BENEFITED FROM RISING SELLING PRICES USED CAR PRICE INFLATION HAS LED TO HIGHER BUYER FEES PER SALVA
Slide 45: IAA clearly benefited from rising average selling prices
90 100 110 120 130 140 150 160 2019 2020 2021 2022 YTD IAA Indexed U.S. Service Revenue Per Vehicle(1) IAA CLEARLY BENEFITED FROM RISING AVERAGE SELLING PRICES 45 (1) Yearly / YTD growth rates calculated as a simple average of reported quarterly growth rates in revenue per vehicle within the applica
Slide 46: IAA margins did not benefit from COVID tailwinds like Copart
IAA MARGINS DID NOT BENEFIT FROM COVID TAILWINDS LIKE COPART 46 Note: IAA Adj. EBITDA is reported by the Company and used above. Copart does not report Adj. EBITDA and therefore GAAP EBITDA (calculated as GAAP Operating Income plus D&A) is used. Copart calendar years have been defined as fiscal quar
Slide 47: Summary: IAA is a long-term loser
SUMMARY: IAA IS A LONG-TERM LOSER 47 • IAA is a second-tier player with a lower multiple business at peak margins, and whose board initiated a sales process in light of the Company’s long-term challenges and unlikelihood of meeting its financial goals • While IAA had its business bled dry for divide
Slide 48: Agenda
48 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responde
Slide 49: Summary: Combination will destroy value
SUMMARY: COMBINATION WILL DESTROY VALUE 49 • When RBA announced the IAA deal, the stock fell 18% despite beating earnings and the market being up • Since the deal announcement, RBA stock has moved in lockstep with the IAA Deal Spread IRR, meaning RBA stock goes up when investors believe the deal is
Slide 50: Market reaction to the deal despite strong Q3 results
MARKET REACTION TO THE DEAL DESPITE STRONG Q3 RESULTS 50 RBA Materially Outperformed Q3 Expectations… …And The Stock Price Plummeted -18% In One Day “Deal Overshadows Solid 3Q22 Results – Lost in yesterday’s events, RBA delivered 3Q22 adjusted diluted EPS of $0.53 compared to our $0.41 estimate and
Slide 51: Why Ritchie Brothers' stock has recovered in recent months
WHY RITCHIE BROTHERS’ STOCK HAS RECOVERED IN RECENT MONTHS 51 RBA Stock Price vs. IAA Deal Spread IRR RBA vs. NASDAQ and SPY (Indexed Price) Correlation (R) = 0.76 • RBA’s stock has recovered in recent months because the general market is up, RBA’s standalone financial results have been strong, and
Slide 52: The market has made its distaste for the deal known
(1) Comparable set from J.P. Morgan in RBA merger proxy filing. No other bank provided RBA comparable companies. “2022 Proxy Statement Peer Group” refers to the peers listed in RBA’s 2022 proxy statement filing All prices as of Feb 14th, 2023 52 THE MARKET HAS MADE ITS DISTASTE FOR THE DEAL KNOWN 80
Slide 53: Sell-side commentary on lack of rationale (I/II)
SELL-SIDE COMMENTARY ON LACK OF RATIONALE (I/II) “IAA is by far RBA’s largest acquisition, and much is needed to assuage fit concerns… we do not like the deal as it muddles the picture, even with a compressed forward multiple.” ─ National Bank of Canada Equity Research, November 7th, 2022 “Our initi
Slide 54: Sell-side commentary on lack of rationale (II/II)
SELL-SIDE COMMENTARY ON LACK OF RATIONALE (II/II) “Our conversations with insurance players suggest IAA’s ability to recapture market share will be an uphill battle…. The investment thesis “muddling” and IAA financial returns are likely to be multiple dilutive; vote game theory suggests blocking the
Slide 55: RBA investors understand the salvage car space
RBA INVESTORS UNDERSTAND THE SALVAGE CAR SPACE RBA SHAREHOLDERS UNDERSTAND THE SALVAGE CAR SPACE VERY WELL 55 The idea that RBA investors reacted negatively to the IAA deal because they did not understand the salvage car industry is patently and verifiably false 0% 10% 20% 30% 40% 50% 60% 70% 80% 90
Slide 56: What was the originally stated rationale for the deal?
WHAT WAS THE ORIGINALLY STATED RATIONALE FOR THE DEAL? 56 “IAA will increase our scale, allow us to diversify our business by entering the large vehicle market with a proven leader and allow us to leverage our marketplace investments over a much wider array of assets.” ─ Ms. Fandozzi, Q3 2022 Earnin
Slide 57: Diversification typically destroys value
DIVERSIFICATION TYPICALLY DESTROYS VALUE 57 • “Growth companies that can’t stand prosperity foolishly ‘diworseify’ and fall out of favor, which makes them into turnarounds…Instead of buying back shares or raising dividends, profitable companies often prefer to blow the money on foolish acquisitions.
Slide 58: No traffic overlap between Ritchie Brothers and IAA
NO TRAFFIC OVERLAP BETWEEN RITCHIE BROTHERS AND IAA 58 • RBA and IAA management has repeatedly talked about buyer synergies when discussing the potential benefits of the IAA deal: ─ “I think the virtues of having a much bigger marketplace is going to allow us to expand who we’re attracting on both t
Slide 59: IAA revenue synergies magically re-named
59 IAA REVENUE “SYNERGIES” MAGICALLY RE-NAMED “Combining the businesses of RBA and IAA and meeting the capital requirements of the combined company in a manner that permits the combined company to achieve any revenue synergies or operational scale efficiencies anticipated to result from the mergers,
Slide 60: IAA revenue synergies are farfetched (I/II)
60 IAA REVENUE “SYNERGIES” ARE FARFETCHED (I/II) Opportunity EBITDA (Mid-point) Company’s Description Reality Grow Domestic IAA Sales Grow International IAA Sales Satellite Yard Opportunity Financing $138M $95M $83M $63M Differentiated offerings and enhanced CAT resources drive incremental volumes L
Slide 61: IAA revenue synergies are farfetched (II/II)
61 IAA REVENUE “SYNERGIES” ARE FARFETCHED (II/II) Opportunity EBITDA (Mid-point) Company’s Description Reality Parts and Services Whole Car Sales Incremental Salvage Markets $48M $48M $48M Leverage learnings from existing RBA offerings to drive services attach at IAA Capture portion of used whole ca
Slide 62: RBA's largest revenue synergy can easily backfire
(1) Grow Domestic IAA Sales RBA’S LARGEST REVENUE “SYNERGY” CAN EASILY BACKFIRE RBA has misrepresented ies and risks associated with problem and attempting to attack its $33B competitor Copart * The largest component of the Company's ‘Revenue Opportunities’ is the presumptive re-taking of market sha
Slide 63: RBA management is in denial on why IAA will not be the exception
RBA MANAGEMENT IS IN DENIAL ON WHY IAA WILL NOT BE THE EXCEPTION TO THE LAWS OF NATURE 63 The history of marketplace businesses contains numerous examples of number 2 players burning enormous amounts of cash to catch up, with no sustainable share gains to show for it • For example, we suspect Lyft w
Slide 64: The fallacy of IAA using RBA's yards to improve CAT performance
64 THE FALLACY OF IAA USING RBA’S YARDS TO IMPROVE CAT PERFORMANCE • “IAA loss of GEICO was many years in the making in their inability to deal with CAT events in TX and FL. That is where Ritchie Brothers footprint is by far the largest. And unlike the salvage business which has a steady state const
Slide 65: The fallacy of using RBA's international footprint
65 THE FALLACY OF USING RBA’S INTERNATIONAL FOOTPRINT FOR IAA GROWTH 2 Grow International IAA Sales “The companies appear to suggest that RBA’s mere presence in various countries — in entirely different industries — can somehow help IAA expand its salvage-car business internationally. Extending the
Slide 66: The truth about the yard synergies (I/II)
THE TRUTH ABOUT THE YARD SYNERGIES (I/II) – SATELLITE YARDS 66 What The Company Has Said About Satellite Yards “We're talking about 5-acre properties. We put 2 ops personnel on the ground. Rent is in the neighborhood of $10,000 a month.” ─ Kari Taylor, RBA CRO, Ritchie Brothers Investor Day “We can
Slide 67: The truth about the yard synergies (II/II)
THE TRUTH ABOUT THE YARD SYNERGIES (II/II) – SATELLITE YARDS 67 The Math on RBA Achieving the IAA Yard “Synergy” on its Own • Even taking management at face value regarding the % of IAA yards that can be used, RBA does not need to spend $7B+ of shareholder capital when management has made it clear t
Slide 68: Value destruction if the deal closes
VALUE DESTRUCTION IF THE DEAL CLOSES 68 Deal Value Destruction Implied Stock Price • IAA unaffected stock price on Nov 4th was $39.25 • Given IAA’s poor Q3 ‘22 that missed expectations and the realization that despite Ancora’s letters there were no interested buyers, we believe IAA stock would be do
Slide 69: Management lacks experience in large scale public company M&A
MANAGEMENT LACKS EXPERIENCE IN LARGE SCALE PUBLIC COMPANY M&A 69 ABRA (CEO) • 2016-2019 • ABRA was a private company • While M&A was a prominent part of H&F’s ownership strategy, the vast majority was tuck-in M&A of small, independent auto body shops • Generally in private equity owned businesses, c
Slide 70: Summary: Combination will destroy value
SUMMARY: COMBINATION WILL DESTROY VALUE 70 • The RBA / IAA combination does not make sense and is a completely unnecessary, unforced error by the RBA Board that would destroy billions in shareholder value • When RBA announced the IAA deal, the stock fell 18% the day the deal was announced, while man
Slide 71: Agenda
71 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responde
Slide 72: Summary: IAA deal is predicated upon manipulated forecasts
SUMMARY: IAA DEAL IS PREDICATED UPON MANIPULATED FORECASTS 72 • For several years RBA management has touted its Evergreen Metrics forward guidance which calls for mid-teens to 20% EBITDA(1) annual growth • After the IAA deal price was agreed and two weeks before the deal was announced, RBA manipulat
Slide 73: RBA's forecasts were manipulated at the eleventh hour
RBA’S FORECASTS WERE MANIPULATED AT THE ‘ELEVENTH HOUR’ 73 Aug-22 Sep-22 Oct-22 Nov-22 Aug 19th, 2022: RBA Shares 5-year Standalone Forecast with IAA Oct 5th, 2022: IAA Agrees to RBA’s price of $46.88 Nov 7th, 2022: RBA and IAA Announce Merger at $46.88 It appears RBA purposely changed the financial
Slide 74: Why the proxy forecasts matter
WHY THE PROXY FORECASTS MATTER • The RBA forecasts of RBA were used by the Board to value RBA on a standalone basis to conclude if they should issue shares at the current trading prices • The RBA Forecasts of IAA (which coincidentally are identical to the IAA forecasts of IAA) were used to assess th
Slide 75: Q4 results highlight the sham forecasts
Q4 RESULTS HIGHLIGHT THE SHAM FORECASTS 75 Source: SEC Filings and Company Presentations. Management’s decision not to use the materially superior actual FY22 results in place of their factually outdated forecast confirms a willingness to misrepresent RBA’s go-forward standalone prospects Management
Slide 76: RBA EBITDA forecast bears no resemblance to historical results
RBA EBITDA FORECAST BEARS NO RESEMBLANCE TO HISTORICAL RESULTS OR PREVIOUS EVERGREEN METRICS • RBA’s forecast for EBITDA compounds at 9.5%, compared to their actual historical performance of 17% • RBA’s forecasted EBITDA growth is roughly half the mid-point of their public evergreen target metrics,
Slide 77: The impact of compounding
THE IMPACT OF COMPOUNDING RBA BOARD AND MANAGEMENT CHOOSE TO MATERIALLY UNDERVALUE ITS OWN EQUITY 77 Source: Company Presentations, SEC filings. (1) Company guidance specifically for Non-GAAP Adj. Operating Income growth, whose growth rate is comparable to EBITDA over time. 100 120 140 160 180 200 2
Slide 78: RBA forecast vs. reality – capex (I/II)
RBA FORECAST VS. REALITY – CAPEX (I/II) 78 Note: Capital Expenditures includes purchase of PP&E and Intangible Assets. Source: SEC Filings. RBA Has Historically Referred To “Net Capex”… …But in the Proxy Suddenly Switched To “Gross Capex” (200) (150) (100) (50) - 50 100 2017 2018 2019 2020 2021 LTM
Slide 79: RBA forecast vs. reality – capex (II/II)
RBA FORECAST VS. REALITY – CAPEX (II/II) MANAGEMENT MADE UNREALISTIC CAPEX PROJECTIONS IN AN APPARENT ATTEMPT TO DEPRESS ITS VALUATION 79 Note: Capital Expenditures includes purchase of PP&E and Intangible Assets. FY23 contains estimates the following brokers: BofA, National Bank of Canada, Raymond
Slide 80: RBA forecast vs. reality – compared to guidance
RBA FORECAST VS. REALITY – COMPARED TO GUIDANCE 80 (1) Company guidance specifically for Non-GAAP Adj. Operating Income growth, whose growth rate is comparable to EBITDA over time. Source: SEC Filings and Company Presentations. RBA Proxy Base Case For Fairness Opinion “True Base Case” (Upside Case i
Slide 81: A history of being willing to say whatever it takes to do a deal
A HISTORY OF BEING WILLING TO SAY WHATEVER IT TAKES TO DO A DEAL • The RBA CFO’s prior career was as the CFO of Wheels Up (ticker: UP) since April 2018. In this role, he architected and oversaw the combination of Wheels Up with the Aspirational Consumer Lifestyle SPAC, where he provided five-year pr
Slide 82: What the sham RBA forecasts accomplish
WHAT THE SHAM RBA FORECASTS ACCOMPLISH • Allows the bankers, board, and management team to justify issuing 72%(1) more shares due to a lower standalone value • Permits the management team to trumpet the accretion of the deal, given the depressed earnings assumptions of their standalone business • Gi
Slide 83: Recreating the DCF used in the fairness opinion
RECREATING THE DCF USED IN THE FAIRNESS OPINION RBA MANAGEMENT DEPRESSED ITS FORECASTS TO MANIPULATE THE OUTCOME OF THE FAIRNESS OPINION 83 Scenario Forecast Assumptions Low High Mid Base Case True Base Case True Base Case w/ Normalized Capex PF Combined Base Case PF Combined True Base Case PF Combi
Slide 84: IAA proxy forecasts
84 IAA PROXY FORECASTS RBA MANAGEMENT TOOK THE AGGRESSIVE IAA MANAGEMENT FORECASTS AT FACE VALUE • Despite the industry and IAA specific headwinds discussed, IAA management put forth highly aggressive forecasts for its own business in the proxy materials • “IAA’s forecasts look aggressive to us… man
Slide 85: RBA board and management appear to have deal fever
RBA BOARD AND MANAGEMENT APPEAR TO HAVE “DEAL FEVER” 85 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 June-22 Aug 8th, 2021: RBA announces $1.1B acquisition of Euro Auctions Aug 13th, 2021: IAA CEO (Kett) emails Ms. Fandozzi to ask if she was available to meet to discuss a po
Slide 86: Playing fast and loose with the facts (I/III)
86 PLAYING FAST AND LOOSE WITH THE FACTS (I/III) IT APPEARS RBA MANAGEMENT WILL SAY AND DO ANYTHING TO CLOSE THE IAA DEAL Topic What Management Said Reality “Top 10 Shareholder” Starboard Financing Intent Whole-Cars Diversification “So first of all, when we started going on the road, I’m happy to re
Slide 87: Playing fast and loose with the facts (II/III)
87 PLAYING FAST AND LOOSE WITH THE FACTS (II/III) IT APPEARS RBA MANAGEMENT WILL SAY AND DO ANYTHING TO CLOSE THE IAA DEAL Topic What Management Said Reality New Deal Structure Intent Satellite Yards Standalone Forecasts Starboard Preferred Terms “What we heard from Ritchie Brothers shareholders is…
Slide 88: Playing fast and loose with the facts (III/III)
88 PLAYING FAST AND LOOSE WITH THE FACTS (III/III) IT APPEARS RBA MANAGEMENT WILL SAY AND DO ANYTHING TO CLOSE THE IAA DEAL Topic What Management Said Reality Q4 2022 Results New Capex Methodology Why Investors Don’t Like IAA Using Forecasts When Historical Actuals Exist “We knew that our investors
Slide 89: Summary: A deeply flawed and manipulated process
SUMMARY: A DEEPLY FLAWED AND MANIPULATED PROCESS 89 • The RBA Board oversaw a deeply flawed process, including the use of sham forecasts designed to suppress RBA’s valuation and support empire-building goals • For several years RBA management has touted its Evergreen Metrics which calls for mid-teen
Slide 90: Agenda
90 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Responde
Slide 91: Summary: RBA board attempted to squash dissent
SUMMARY: RBA BOARD ATTEMPTED TO SQUASH DISSENT RATHER THAN LISTEN TO ITS OWNERS 91 • The proxy statement made it abundantly clear that the Board and management are not open to considering feedback and wish to force the deal through by any means necessary • Several large, long-term and prominent inve
Slide 92: How other RBA shareholders feel about the IAA deal
HOW OTHER RBA SHAREHOLDERS FEEL ABOUT THE IAA DEAL 92 • “At the core, we believe the merger would introduce a level of unnecessary risk for Ritchie Brothers shareholders…We believe the deal is a distraction from the core Ritchie Brothers strategy described by management…. The IAA business has been l
Slide 93: Only conflicted RBA shareholders support the deal
ONLY CONFLICTED RBA SHAREHOLDERS SUPPORT THE DEAL 93 (1) Based on Feb 13th share prices. For RBA, all share counts based off recently publicly disclosed % ownership in press releases by the respective firms. For IAA, Ancora publicly disclosed % ownership used and for IFP and Eagle Asset Mgmt. the Q4
Slide 94: RBA board and management's reaction to shareholders opposing the deal
94 RBA BOARD AND MANAGEMENT’S REACTION TO SHAREHOLDERS OPPOSING THE DEAL The Board and Management do not appear open to considering feedback from owners and are instead intent on forcing through the deal by whatever means necessary Excerpt From The Proxy Implication “Also on December 21, 2022, the R
Slide 95: The board actively worked against RBA shareholders with Starboard preferred financing
THE BOARD ACTIVELY WORKED AGAINST RBA SHAREHOLDERS WITH THE STARBOARD PREFERRED FINANCING 95 The board actively worked against common holders, giving away shareholder capital, to purchase the endorsement of Starboard • Instead of listening to broad-based shareholder concerns regarding the IAA deal a
Slide 96: Special dividend = shareholder coercion
SPECIAL DIVIDEND = SHAREHOLDER COERCION 96 Account name redacted • Given its cash position, high cash generation, and under-levered capital structure, RBA has the ability to pay a special dividend at any time • Offering a special dividend to shareholders only if they vote in favor of the deal is a t
Slide 97: Starboard's sweetheart deal
STARBOARD’S SWEETHEART DEAL 97 The Board’s actions are worse than greenmail – the Board is using a sweetheart security and a board seat to buy support and quell dissent from long-term common shareholders • By her own admission, Ms. Fandozzi (RBA CEO) characterized her relationship with Jeff Smith as
Slide 98: RBA price performance and Starboard involvement
95 97 99 101 103 105 Indexed Price Performance RBA NASDAQ SPY RBA PRICE PERFORMANCE AND STARBOARD INVOLVEMENT RBA PRICE FELL IN THE WEEK FOLLOWING STARBOARD’S INVESTMENT WHILE THE INDEXES ROSE 98 …RBA Stock Fell Following Starboard’s Investment …And Also Underperformed the Indexes… Starboard Investm
Slide 99: Starboard senior preferred conversion and coupon
• It is common for fixed income securities to be issued in $1,000 or $1 denominations. In the illustration below, every $1,000 of par value of the Starboard Senior Preferred would convert into 13.7 shares of RBA i.e., $1,000 divided by $73(1) . • On a quarterly basis, these shares are therefore enti
Slide 100: Third parties have confirmed Luxor's analysis
THIRD PARTIES HAVE CONFIRMED LUXOR’S ANALYSIS 100 • RBA has attempted to discredit the comments regarding the richness of Starboard’s paper provided by Luxor as “fun with numbers Black-Scholes math” • We asked the fixed income trading desks of four of the largest, most well respected, and publicly l
Slide 101: Starboard vs. common equity investors return
STARBOARD VS. COMMON EQUITY INVESTORS RETURN STARBOARD DOES BETTER THAN COMMON EQUITY INVESTORS OVER TIME, WITH ZERO DOWNSIDE 101 Note: Based on Feb 13th RBA stock price. Analysis assumes a 9% growth rate in RBA common dividends, consistent with long-term historical trends. Source: SEC Filings. • St
Slide 102: Starboard senior preferred financial flexibility
STARBOARD SENIOR PREFERRED “FINANCIAL FLEXIBILITY” THIS INSTRUMENT’S HIGH AND ESCALATING COST IS THE POLAR OPPOSITE OF FINANCIAL FLEXIBILITY • RBA management has surprisingly touted the benefit of the Starboard Senior Preferred shares as being perpetual in nature, thereby offering “financial flexibi
Slide 103: Starboard's free option
STARBOARD’S FREE OPTION 103 Should Starboard support the deal? Starboard makes $10M Starboard makes $99-154M Deal voted down Deal closes Starboard is incentivized to support the deal and say whatever is required to push it over the finish line regardless of whether it is in the interest of common sh
Slide 104: RBA buying Starboard's endorsement
RBA BUYING STARBOARD’S ENDORSEMENT IS A BOX REPEAT 104 “Starboard also has agreed that, during the Standstill Period, it will not vote any shares beneficially owned by it against (including through a “withhold” vote) any of the Company’s nominees for director, including any continuing director, or t
Slide 105: Summary: RBA board would rather squash dissent
SUMMARY: RBA BOARD WOULD RATHER SQUASH DISSENT THAN LISTEN TO ITS OWNERS 105 • The proxy statement made it abundantly clear that the Board and management are not open to feedback and wish to “force the deal through” by any means necessary • Several large, long-term and prominent investors beyond Lux
Slide 106: Agenda
106 AGENDA • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respond
Slide 107: Appendix
107 APPENDIX • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respo
Slide 108: Ritchie List opportunity
RITCHIE LIST OPPORTUNITY RITCHIE LIST PRESENTS A GROWING OPPORTUNITY TO ADD AN ENORMOUS AMOUNT OF HIGH MARGIN REVENUE 108 RBA vs. Machinery Trader • RBA’s largest competitor in the P2P market offers a clunky user interface and antiquated business practices • Ritchie List initially had ~35-40K listin
Slide 109: SmartEquip opportunity (I/III)
SMARTEQUIP OPPORTUNITY (I/III) SMARTEQUIP IS A DOMINANT SOFTWARE COMPANY IN THE EQUIPMENT PARTS AND MAINTENANCE SPACE 109 • SmartEquip is the central database of equipment catalogs, offering an e-commerce checkout experience, and critically, the pipes connecting OEMs to allow for a convenient user e
Slide 110: SmartEquip opportunity (II/III)
SMARTEQUIP OPPORTUNITY (II/III) SMARTEQUIP INTRODUCES THE ABILITY TO CROSS-SELL PARTS AND SERVICES AT AUCTION 110 • SmartEquip is currently a small business, run-rating ~$20M of high margin software revenue, but substantial opportunity lies in the integration with other parts of Ritchie’s business •
Slide 111: SmartEquip opportunity (III/III)
SMARTEQUIP OPPORTUNITY (III/III) INTEGRATION INTO IMS PROVIDES MONETIZATION OPPORTUNITIES THROUGHOUT THE LIFE OF THE EQUIPMENT 111 • Over the last several years, RBA has been rolling out its IMS software which allows users to: ─ Track their equipment's utilization ─ Easily access data on the valuati
Slide 112: Services opportunity (I/III)
SERVICES OPPORTUNITY (I/III) INSPECTION REPORTS ALONE REPRESENT A $100M+ EBITDA OPPORTUNITY 112 • One example of how RBA can bring services to bear is a recent test launched whereby the Company offered inspection reports • Inspection reports provide a more a more detailed assessment of equipment goi
Slide 113: Services opportunity (II/III)
SERVICES OPPORTUNITY (II/III) FINANCIAL SERVICES REPRESENTS A HIGH MARGIN REVENUE OPPORTUNITY IN THE HUNDREDS OF MILLIONS OF DOLLARS 113 • Another such example is the extension of Ritchie Brothers Financial Services (“RBFS”), a marketplace connecting lenders and buyers of equipment that need financi
Slide 114: Services opportunity (III/III)
SERVICES OPPORTUNITY (III/III) RITCHIE BROTHERS CAN ALSO MONETIZE SEARCH AND ADVERTISING, BUT PRODUCT FUNCTIONALITY WORK IS NEEDED 114 • It is common for both listings and transactional marketplaces to monetize search and display advertising • Sellers are often willing to pay advertising dollars to
Slide 115: Evergreen metrics vs. RBA historical performance
EVERGREEN METRICS VS. RBA HISTORICAL PERFORMANCE 115 Evergreen Metrics 2019 – LTM Sep-22 Actual CAGR(2) GTV Growth High Single Digits to Low Teens 5% Service Revenue Growth Low Double Digits to High Teens 9% EBITDA Growth(1) Greater Than Service Revenue Growth 14% Operating Cash Flow Greater than 10
Slide 116: Appendix
116 APPENDIX • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respo
Slide 117: Copart vs. IAA international website traffic
COPART VS. IAA INTERNATIONAL WEBSITE TRAFFIC COPART HAS OVER 2.5X THE INTERNATIONAL TRAFFIC OF IAA 117 Source: Similarweb data of IAA and Copart websites from December 2019 to December 2022. • Copart has a multiple of the international website traffic vs. IAA and it appears the gap has been recently
Slide 118: Copart on the importance of investment
COPART ON THE IMPORTANCE OF INVESTMENT 118 Question from Analyst: you talked about expanding the previously announced land acquisition plans. Can you talk about maybe trends you're seeing in those markets? Answer: Simply, growth in volume. It's kind of funny. I used to be on the finance side and I w
Slide 119: IAA and Copart service revenue per unit
IAA AND COPART SERVICE REVENUE PER UNIT IAA RECEIVES LOWER ASPS AT AUCTION AND THEREFORE MUST OFFER LOWER FEES TO SELLERS 119 • Using Yipitdata on U.S. unit volumes and reported U.S. Service Revenues, we were able to compare CPRT and IAA units, service revenues, and service revenue per unit • The da
Slide 120: Copart's growing dominance
COPART’S GROWING DOMINANCE THE GAP BETWEEN COPART AND IAA WILL CONTINUE TO GROW AS INSURANCE PROVIDERS CONTINUE TO CONSOLIDATE VOLUMES WITH COPART 120 • We view the local share shifts as a microcosm of broader industry trends • 3 of the top 10 insurers have moved over to practically exclusive servic
Slide 121: IAA and the whole car opportunity
“I think we've been consistent about our messaging around the vehicles that qualify under that non-compete royalty agreement, we continue to sell hard at that. We believe that here we are, we're 3 years into the 5 years. We continue to service that market and the period of time remaining, obviously
Slide 122: Similar non-salvage businesses
SIMILAR NON-SALVAGE BUSINESSES 122 Source: Yipitdata. Note: Whole-car assumed to mean “Clear Title” for IAA and “Clean Title” for Copart. 10% 12% 14% 16% 18% 20% 22% 24% 26% Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20 Aug-20 Dec-20 Apr-21 Aug-21 Dec-21 Apr-22 Aug-22
Slide 123: Appendix
123 APPENDIX • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respo
Slide 124: Stock price decline in response to deal is larger than it first appears
STOCK PRICE DECLINE IN RESPONSE TO DEAL IS LARGER THAN IT FIRST APPEARS 124 RBA has historically outperformed the SPY by 4% when beating consensus EBITDA estimates… …Implying that the actual stock price response to the IAA deal was -22% RBA beat Q3 EBITDA by +24% vs. historical +19% beat average Ear
Slide 125: IAA and RBA footprint
125 IAA AND RBA FOOTPRINT RBA’S “SYNERGISTIC” FOOTPRINT IS MINISCULE VS. IAA’S EXISTING ACREAGE AND CANNOT SOLVE ITS PROBLEMS • RBA management touts that its combined ~450 acres of land can improve IAA’s CAT operations • Puzzlingly, management also discloses that IAA has 10,000 acres of total capaci
Slide 126: Appendix
126 APPENDIX • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respo
Slide 127: How the process for RBA's proxy projections was deeply flawed
HOW THE PROCESS FOR RBA’S PROXY PROJECTIONS WAS DEEPLY FLAWED - DETAIL 127 Excerpt From The Proxy Implication “The RBA board approved five-year standalone forecasts for RBA (the “RBA base case forecasts”) for purposes of the respective financial analyses of Goldman Sachs and Guggenheim Securities. T
Slide 128: How the process for proxy projections was flawed (continued)
HOW THE PROCESS FOR RBA’S PROXY PROJECTIONS WAS DEEPLY FLAWED – DETAIL (CONTINUED) 128 Excerpt From The Proxy Implication “The following table presents a summary of the RBA upside forecasts, which were made available to IAA in October 2022. A version of the RBA upside forecasts were provided to IAA
Slide 129: RBA forecast vs. reality – capex (I/III)
RBA FORECAST VS. REALITY – CAPEX (I/III) NEAR-TERM CAPITAL EXPENDITURES WERE INCREASED TO DRIVE DOWN THE STANDALONE RBA VALUATION • There was clearly an effort taken across the forecast to reduce the value of RBA standalone and therefore justify the issuance of 72%(1) more shares. This not only occu
Slide 130: RBA forecast vs. reality – capex (II/III)
RBA FORECAST VS. REALITY – CAPEX (II/III) • Ignoring the cash inflow, but capturing a larger cash outflow is not how the business has historically operated, but it does serve to depress the standalone valuation and help justify the IAA Merger • The Company’s forecast for Q4 2022 implies a greater le
Slide 131: RBA forecast vs. reality – capex (III/III)
RBA FORECAST VS. REALITY – CAPEX (III/III) • Looking at the expected annual spend, the proxy forecasts have >2X the amount of spend on a gross basis and ~10X the amount of spend on a net basis going forward • RBA materially step-up their capital expenditure forecast in October 2022, just as the bank
Slide 132: Special transformation awards and poison pill
PROBLEMATIC SPECIAL “TRANSFORMATION” AWARDS PUSH BET-THE-COMPANY M&A, WHILE POISON PILL LIMITS ACCOUNTABILITY 132 It was extremely risky for the RBA Board to incentivize RBA’s new management team, with a CEO who has never done public company M&A and a brand-new CFO who never held a public company CF
Slide 133: Appendix
133 APPENDIX • Executive Summary • I: Ritchie Brothers Has Incredible Standalone Prospects • II: IAA Is A Second Tier Business Facing Significant Challenges • III: Combination Will Destroy Billions In RBA Shareholder Value • IV: Board Recommendation Based On Manipulated Forecast • V: RBA Board Respo
Slide 134: RBA board ownership
134 RBA BOARD OWNERSHIP THE BOARD COLLECTIVELY OWNS ~0.2% OF RBA SHARES AND DSU’S, THE VAST MAJORITY OF WHICH WAS NOT PURCHASED • The average tenure of the board is 6 years • One would expect that a board of this tenure, with individuals financially capable of purchasing stock out of their own pocke
Slide 135: 1-day negative reaction to Starboard's involvement
IF MEASURED ACCURATELY, RBA STOCK HAD A 1-DAY NEGATIVE REACTION TO STARBOARD’S INVOLVEMENT 135 RBA has historically outperformed the SPY by 4% when beating consensus EBITDA estimates… …Implying that the actual stock price response to Starboard’s involvement was -3% Earnings Date Quarter RBA EBITDA B
Slide 136: The Starboard senior preferred is designed to cost RBA investors more
THE STARBOARD SENIOR PREFERRED IS DESIGNED TO COST RBA INVESTORS MORE AT THE WORST TIME 136 • RBA cannot call (i.e., repay) the Starboard senior preferred coupon for the first nine years. The only exception is that RBA has a brief window to call this paper at par plus accrued after four years if Sta
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Ritchie Bros. Auctioneers — Proxy Contest (February 2023) on 6ix