A high Ritchie Bros. Auctioneers Inc. shareholder is opposing a takeover of auto salvage and components public sale firm IAA Inc., a enterprise it calls “distinctly inferior.”

Luxor Capital Group, which owns about 3.6 per cent of Ritchie Bros. shares, stated an 18-per-cent drop within the firm’s share worth for the reason that deal was introduced Nov. 7 signifies buyers’ “clear distaste” for the transaction.

“The IAA Merger will completely topic RBA buyers to the vagaries of working a weaker and declining second place participant with far much less interesting enterprise dynamics than these presently loved by RBA, as a dominant chief with an extended runway of progress forward,” Luxor stated in a letter dated Friday to the corporate, a replica of which Bloomberg reviewed.

A spokesperson for Ritchie Bros., based mostly in Burnaby, British Columbia, stated the corporate could not touch upon a letter it had not seen. They stated the take care of IAA will unlock extra service income and be accretive throughout the first 12 months.

Canada’s Ritchie Bros. agreed to amass IAA in a money and inventory deal that valued the corporate at about $6.2 billion (all figures in USD), or $46.88 a share, a 19-per-cent premium on the time. The announcement was met by a document selloff in Ritchie Bros. shares, which has decreased the worth of the transaction to about $5.6 billion as of Thursday, in accordance with information that Bloomberg compiled.

With its shares now down 9.6 per cent for the yr, Ritchie Bros. has a market worth of about $6.1 billion. Shares of IAA, based mostly in Westchester, Illinois, have dropped 22 per cent this yr, reducing its market worth to $5.3 billion.

A high IAA investor got here out towards the deal per week after it was introduced. Ancora Holdings Group, which stated it owned 4 per cent of IAA, stated in a letter to that firm’s board that it deliberate to vote towards the takeover as a result of the deal was flawed and structured to learn administration on the expense of shareholders.

Ancora added, although, that it believed Ritchie Bros. was a logical purchaser and that it had nice admiration for its administration below Chief Government Officer Ann Fandozzi. The agency urged IAA’s board to pursue a modified transaction that included a bigger money consideration and the next premium.

Luxor needs Ritchie Bros. to stay a standalone firm, saying it would additionally vote towards the merger. If the deal is terminated as a result of the shareholders of both firm vote it down, no break-up charge could be required, it stated in its letter.

That will permit Ritchie Bros. to deal with executing the corporate’s core technique and would seemingly push up its inventory worth.