"In our view, the deal adds risk to Ritchie Bros, and added risk beyond just typical integration risk, as IAA had been a weakening asset relative to its larger peer Copart Inc," Chul Chang, Vontobel portfolio manager, told Reuters via email.
"We believe there is good opportunity in the standalone Ritchie Bros business, and the deal complicates the investment thesis."
Vontobel Asset Management owns 1.67% of Ritchie Bros shares and 0.25% of Copart shares, according to U.S. filings compiled by Refinitiv Eikon.
"We have heard from numerous new and existing Ritchie Bros. shareholders who support the IAA acquisition and recognize the substantial value it creates," a Ritchie Bros spokesperson said on Monday.
Ritchie Bros on Jan. 23 sweetened the cash component of its buyout offer for IAA by 28%, valuing the U.S. auto retailer at $5.94 billion, and also secured the backing of a key IAA shareholder that had questioned the initial offer.
While four Ritchie Bros shareholders have publicly opposed the deal, three are supportive, according to statements and sources.
Last week, Ritchie Bros' shareholders Janus Henderson Investors and Deep Field Asset Management came out against the company's planned acquisition of IAA.
Investment firm Luxor Capital Group, which owns 3.6% of Ritchie Bros stock, has been a vocal opponent of the deal,
But Eagle Asset Management and Independent Franchise Partners, which own 2.92% and 4.75% respectively of Ritchie Bros, helmed by Chief Executive Ann Fandozzi, plan to vote for the proposed deal, according to Refinitiv Eikon data and sources.
IAA shares ended down 0.9% on Monday at $42.16, a 5% discount to Ritchie Bros' offer price. Ritchie shares fell 0.4%.
(Reporting by Maiya Keidan; editing by Jonathan Oatis and Stephen Coates)
