Going, going, gone

Allan Leibowitz -
News Story
- 12 May 2022 ( #1076 ) - Vancouver, BC, Canada
3 min read
Ritchie Bros' Houston site
Ritchie Bros' Houston site

Ritchie Bros. Auctioneers is scrapping its takeover bid for Euro Auctions.

Hot on the heels of the halt to the merger of Konecranes and Cargotec, Ritchie Bros. UK Holdings is “discontinuing the Phase 2 review by the UK Competition and Markets Authority (CMA)”, effectively ending its takeover bid for Europe’s biggest equipment auctioneer.

“The decision follows the referral of the proposed acquisition to a Phase 2 review by the CMA,” says the Ritchie parent company in a statement.

It was CMA intervention which also stopped the Konecranes/Cargotec deal which got through numerous other competition authorities. 

The UK competition authority had concerns that the proposed deal could reduce competition in the UK market, which could result in higher prices for the companies’ customers and a lower quality service.

“Ritchie Bros. and Euro Auctions are the two biggest auction service providers for used heavy equipment in the UK and are relied on by businesses across the country.

“During its initial Phase 1 investigation, the CMA found that the companies have a very high marketshare in the supply of auction services for heavy construction machinery, with Euro Auctions being the clear market leader and Ritchie Bros. the second-largest provider,” says a CMA communique.

“The CMA also found that other auction providers were significantly smaller and that auction buyers and sellers were unlikely to switch to other sale methods – for example, marketplaces, listing websites and dealers.”

Ritchie Bros. notes that completion of the purchase agreement was conditional on receipt of clearance from the CMA which it “does not believe there is any realistic prospect for … given the significant concerns raised by the CMA to date”.

The company intends to issue redemption notices with respect to the USD600 million aggregate principal amount of 4.750% senior notes due in 2031 and the CAD425 million aggregate principal amount of 4.950% senior notes due in 2029 previously issued to finance a portion of the cash consideration for the proposed acquisition.

Ritchie Bros. CEO Ann Fandozzi says: "We are disappointed by the decision taken by the CMA to refer the proposed acquisition to a Phase 2 review and respectfully disagree with their views. While we believe the proposed acquisition would have accelerated our strategy, we remain committed to forging ahead in our transformational journey to become the trusted global marketplace for insights, services and transaction solutions. We will continue to seek out and execute on organic investments and key acquisitions to accelerate our pace in achieving our ultimate vision." 

The termination of the deal means business as usual for Euro Auctions which has reaffirmed its “commitment to unreserved auctions”.

The company says its business remains the leading auction brand in Europe and the strong trading performance has continued in 2022 with hammer values in recent auctions surpassing impressive 2021 levels. 

“Euro Auctions will now continue the strategy successfully executed since 1998 of building, strengthening, investing in and growing across its eight locations in the United Kingdom, Northern Ireland, Germany, Spain, Australia and the United States. Euro Auctions will continue to be the auction house of choice in three continents with an unrivalled customer proposition,” says a company statement. “The focus continues to be on the expansion and growth of the business.”

“We look forward to accelerating the growth of the Euro Auctions business as an independent global operator,” says founder and director Derek Keys.

 

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