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Vancouver-based Ritchie Bros. revised its roughly US$6-billion bid for Illinois-based auto salvage and parts auction company IAA this week after months of shareholder opposition to its original proposal.CODIE MCLACHLAN /The Canadian Press

Despite Ritchie Bros. Auctioneers Inc. sweetening its multibillion-dollar offer to buy IAA Inc., one of its major shareholders remains unpersuaded.

Vancouver-based Ritchie Bros. RBA-T revised its roughly US$6-billion bid for Illinois-based auto salvage and parts auction company IAA IAA-N this week after months of shareholder opposition to its original proposal. The new terms included a larger cash component and less stock, meaning existing Ritchie Bros. shareholders would face less dilution.

It also added a US$1.08 one-time special dividend for the heavy equipment seller’s own shareholders.

Despite those updates, Luxor Capital Group released a statement Tuesday evening saying the revised deal has “done little to change the financial terms for RBA shareholders.” New York-based Luxor, which owns roughly 3.6 per cent of Ritchie Bros. shares, has opposed the transaction since it was originally announced in November, arguing the company would be better off as a standalone entity.

Ritchie Bros. was able to increase the cash component of its offer – to US$12.80 per share from US$10 previously – in part by accepting a US$500-million capital injection from Starboard Value LP. The Starboard investment, which was announced at the same time as the revised IAA takeover bid, would see the activist investor buy US$485-million worth of Ritchie Bros. preferred shares for US$72 per share with a 5.5-per-cent dividend and another US$15-million of the company’s common shares at US$59.72 per share. Ritchie Bros. shares closed at US$58.74 on the New York Stock Exchange on Tuesday.

Luxor, in its statement Tuesday, said “the revised deal is overwhelmed by the extravagant terms offered to Starboard.”

No matter what happens to Ritchie Bros., Luxor said, “Starboard will significantly outperform common shareholders” and will receive a dividend that “materially exceeds common shareholders’ dividends.”

Luxor also filed a proxy statement last week, before the updated deal terms and the Starboard investment were announced, urging shareholders to reject the transaction. Shareholders are set to decide the fate of the proposal at a March 14 meeting.

Analysts, meanwhile, were quick to praise the revised offer.

“The update meaningfully raises confidence levels regarding the strategic rationale of (and potential upside from) the merger, and, relatedly, the probability of the deal closing,” Bank of Nova Scotia analyst Michael Doumet told clients early Tuesday.

Baird analyst Craig Kennison released a note Monday evening saying the revised deal was effectively “bringing a gun to a knife fight.”

“We believe backing from Starboard Value plus a few deal sweeteners will persuade influential shareholder advisory firms to recommend in favour of the deal.”