New York - Ancora Group Holdings, a key shareholder in U.S. auto retailer IAA, has 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.
Ancora, an activist who has successfully pushed for change at companies like Kohl's and Hasbro, threw its weight behind the tie-up after Ritchie Bros changed the terms.
Ritchie Bros recut the deal, valued at nearly $6 billion, to include more cash for IAA shareholders and reduce the dilution for Ritchie Bros shareholders.
The firm's chief, Jeffrey Smith, will join the board and the firm's chief, Starboard Value LP, to make a $500 million preferred investment in Ritchie Bros. Ancora will have a 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 the 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 the hedge fund Luxor Capital Group, a vocal opponent of the deal.
Luxor said the deal 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 misaligned. Ancora noted that Luxor's Ritchie Bros stake doubled over the past three months while short interest in IAA was increasing in parallel. Luxor disclosed this week in a regulatory filing with the hedge fund Fir Tree Capital Management LP that they will get a trade incentive for investments in the auto companies.
Fir Tree was a prominent short seller and last year made a public bet against the coin Tether.
A representative for Luxor and Fir Tree could not be reached for comment.
In recent weeks, shareholders on both sides of the deal have expressed their views. The deal is opposed by Janus Henderson Investors, while Eagle Asset Management and Independent Franchise Partners have lined up alongside Ancora to support it.
James Chadwick, the head of Ancora's hedge fund unit, 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 pushed IAA to sell itself.