A major shareholder of Ritchie Bros. Auctioneers Inc. filed with the U.S. Securities and Exchange Commission (SEC) Wednesday in opposition to its proposed takeover of IAA Inc., an auto parts auction company. 

The preliminary proxy statement was filed by Luxor Capital Group, a New York-based investment manager, which owns around 3.6 per cent of Ritchie Bros.’s outstanding shares, according to a news release from Luxor.

The statement was filed with the U.S. regulator ahead of an upcoming special meeting of Ritchie Bros. shareholders scheduled to take place on March 14. 

According to the release, Luxor outlined its “serious concerns” in the statement to the SEC regarding the proposed takeover of IAA. Luxor said its concerned shares of the auction company are significantly undervalued and should not be used as currency for acquisitions. 

“Completion of the IAA Merger risks the permanent destruction of over US$1.8 billion of shareholder value,” Luxor said in the release. 

BNN Bloomberg has reached out to both Ritchie Bros. and IAA for comment on the filing. A spokesperson for IAA declined to comment.

Luxor said a merger with IAA would weigh negatively on the Ritchie Bros. business. 

“IAA is a highly challenged business that is structurally disadvantaged to its primary competitor and rapidly losing market share,” Luxor said.

“The IAA Merger will dilute RBA shareholders with the issuance of ~70% more shares while substantially and permanently lowering the combined Company’s trading multiple and EBITDA growth rate,” Luxor said. 

Ritchie Bros. announced its acquisition of IAA on Nov. 7 in a deal valued at around US$7.3 billion, which involved an assumption of around US$1 billion in net debt. The deal was expected to close in the first half of 2023, following shareholder approval from both companies.