Ritchie Bros. in Agreement to Acquire IronPlanet for $758.5 Million
Industrial auctioneer Ritchie Bros. Auctioneers Inc. and IronPlanet, an online equipment marketplace, have entered into an agreement under which Ritchie Bros. will acquire IronPlanet for about $758.5 million.
The boards of directors of both companies approved the transaction, which is expected to close by the first half of 2017, the companies said.
Bringing together Ritchie Bros.’ scale, geographic footprint and brand strength with IronPlanet’s complementary online models will offer global customers more options to move more of their inventory across multiple sales channels, the companies said.
“Our commitment to diversifying our offerings is directly in line with customer demand for multiple selling and buying solutions,” Ravi Saligram, CEO of Ritchie Bros., said in a statement. “Together with IronPlanet, we will create a combined company of trusted brands with the ability to provide customers around the world with a greater number of choices and platforms to sell, buy and list equipment when, where and how they want — whether on-site or online.”
Saligram called the agreement a “transformative transaction” and “the logical next step” for Ritchie Bros., which is based in Vancouver, British Columbia.
“IronPlanet has built a leading online marketplace and technology platform across a number of verticals, and when combined with Ritchie Bros.’ strength in live on-site auctions, will prove to be a powerful combination in driving value for our customers,” Gregory Owens, chairman and CEO of IronPlanet, said in a statement.
Both companies are very active in facilitating sales in the Class 8 used-truck market, analysts said. IronPlanet sold about $787 million of gross merchandise value through its sales channels during 2015, according to the Pleasanton, California-based company, and achieved a 25.2% compounded growth rate in assets sold from 2013 through 2015.
Gross merchandise value represents the total proceeds from all items sold through such marketplaces, and it is a measure of operational performance and not a measure of financial performance, liquidity or revenue, according to IronPlanet.
This growth momentum has continued, with a 41% increase in gross merchandise value during the first half of 2016 relative to the same period in 2015, IronPlanet said.
Collectively, Ritchie Bros. and IronPlanet, on a pro forma basis, sold more than $3 billion of assets through online transactions for the 12-month period ending June 30, they said.
Ritchie Bros. also announced it will become Caterpillar Inc.’s preferred global partner for live on-site and online auctions under the agreement, which will take effect upon completion of the IronPlanet acquisition.
The addition of IronPlanet also provides Ritchie Bros. with access to new, large customer segments, including government surplus and oil and gas, the company said.
Furthermore, the wider range of sales solutions offered by the combined company will allow it to more effectively meet customer preferences in many key international locations, Ritchie Bros. said, including China, Germany, Japan and the United Kingdom — where its established infrastructure will provide a platform to launch IronPlanet’s features and services.
The IronPlanet agreement was announced after Bloomberg News reported Aug. 9 that Ritchie Bros. tumbled 11%, for its worst loss in seven years. Second-quarter earnings and sales missed estimates, attributed to a sudden decline in global equipment pricing in June. However, Ritchie Bros. also boosted its dividend.
