Ritchie Bros to acquire Euro Auctions in USD1bn deal and expand its reach in EMEA region

Ritchie Bros, a global asset management, disposition, and services company, is to acquire European plant and machinery auction house, Euro Auctions, for an enterprise value of GBP775 million (approximately USD1.08 billion).

Founded in 1998, Euro Auctions conducts unreserved heavy equipment auctions with onsite and online bidding under the brands Euro Auctions and Yoder & Frey, with 200-plus employees in 14 countries. In 2020 the company conducted 60 auctions, selling close to 90,000 items for GBP484-plus million across its nine locations in the United Kingdom, Northern Ireland, Germany, Spain, the United Arab Emirates, Australia, and the United States. Similar to Ritchie Bros., Euro Auctions also sells items through a timed auction format and a daily marketplace with Buy Now and Make O er options.

"Ritchie Bros. and Euro Auctions are an ideal  t with a united goal to make asset insights, service o effrings and disposition solutions easier than ever," says Ann Fandozzi, Ritchie Bros. CEO. "Euro Auctions has an incredibly talented team, with expertise in asset sourcing, auction operations, sales, and customer service. Their 'can do' attitude and entrepreneurial spirit combined with technology has helped them adapt and grow, in much the same way as we have. This acquisition signi ficantly accelerates our strategy to drive revenue and earnings growth and add shareholder value by continuing to expand our capabilities in new channels, sectors, regions, and customer segments."

Euro Auctions Founder and Director Derek Keys adds, "Dave Ritchie and his brothers were a big inspiration for my brothers and I in the creation of Euro Auctions. We modelled much of what we do o n Dave's customer-centric philosophy, which still runs through Ritchie Bros. today. Bringing us together will drive value for customers, as we provide more equipment, solutions, and services to the many industries and regions in which we operate."

Ritchie Bros will be retaining Euro Auctions employees and its brand, both of which are highly regarded in the EMEA region. This will expand Ritchie Bros.' overall footprint and access to equipment, while also tapping into new revenue streams with service o fferings to Euro Auctions customers, including inventory management services, data solutions,  financing, warranty, insurance, inspections, refurbishing, shipping, and more.

Under the terms of the transaction, Ritchie Bros will acquire 100 per cent of the equity of the companies comprised within the Euro Auctions group for an enterprise value of GBP775 million (approximately USD1.08 billion) in cash. This represents an implied multiple of ~15.3x 2021E EBITDA (non-GAAP measure), including run rate synergies. Ritchie Bros. intends to  nance the transaction through a combination of cash on hand and new debt; and has bridge  financing commitments from Goldman Sachs Bank USA, subject to customary terms and conditions to facilitate the transaction close. Following the close of the transaction and the required  financing, Ritchie Bros. is expected to have an adjusted net debt to adjusted EBITDA ratio (non-GAAP measure) of approximately 3.9x.

Ritchie Bros. has secured employment arrangements with key management of the Euro Auctions business, including Derek Keys, who will continue to be involved for a minimum of three years post-closing. It is intended that Jonnie Keys will assume a senior leadership position, and Lynden and Trevor Keys will be retained as sourcing leads.

The transaction was approved by the Board of Directors of Ritchie Bros. and is expected to close in late 2021 or early 2022, subject to regulatory clearances and the satisfaction of other customary closing conditions.

Goldman Sachs & Co is serving as exclusive financial advisor to Ritchie Bros, Norton Rose Fulbright LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal advisors, and KPMG LLP is serving as accounting, tax and IT advisor. Je fferies International Limited is serving as  nancial advisor to the vendors of Euro Auctions, and A&L Goodbody LLP as legal advisor.