Ritchie Bros. Buying IronPlanet, Partnering With Cat (Updated)
By pdamon29 August 2016
Ritchie Bros Auctioneers (RBA) said it will acquire IronPlanet, an online marketplace for used heavy equipment, backed by Caterpillar Inc., for $758.5M. Ritchie, Burnaby, B.C., which focuses on the sale of heavy used machinery, said it will fund the transaction with a combination of cash and new debt.
RBA also announced a deal with Caterpillar for live onsite and online auctions of Caterpillar used equipment, effective upon the closing of the IronPlanet acquisition, which is expected in the first half of next year. Caterpillar and its dealers own a minority stake in IronPlanet.
Later, the two companies jointly issued the following release, which actually led with the alliance and mentions the acquisition second. The announcement, in part, said:
Ritchie Bros., the world’s largest industrial auctioneer and a leading equipment distributor and Caterpillar Inc. announced that they have entered into a strategic alliance agreement. Under the terms of the agreement, Ritchie Bros. will become Caterpillar’s preferred global partner for live onsite and online auctions with respect to used Caterpillar equipment, and will complement Caterpillar’s existing dealer channels.
Ritchie Bros. will provide Caterpillar and its dealers with access to proprietary auction platforms, software and other value-added services. The strategic alliance is also expected to strengthen Ritchie Bros.’ relationship with Caterpillar’s independent dealers around the world by providing them enhanced and continued access to a global auction marketplace to sell their used equipment.
Ritchie Bros. also announced that it has reached an agreement to acquire IronPlanet, an online marketplace for used heavy equipment and other durable asset sales, of which Caterpillar and its dealers own a minority position. The combined company will deliver a multi-channel marketplace that will provide a full range of equipment asset management and disposition solutions.
The new strategic alliance between Ritchie Bros. and Caterpillar replaces and expands on existing agreements in place between Caterpillar, its dealers and IronPlanet. The new strategic alliance will become effective when Ritchie Bros. completes its acquisition of IronPlanet, which is subject to regulatory clearances and the satisfaction of other customary closing conditions.
“Ritchie Bros. is proud to enter into this historic alliance, which will strengthen our relationship with Caterpillar, its dealers and end users, as well as help expand our global reach and footprint,” said Ravi Saligram, chief executive officer of Ritchie Bros. “Our marketing capabilities, unrivaled suite of technology and powerful multi-channel transactional platforms will add tremendous value and make us a trusted strategic partner to the Caterpillar family.”
“A key element of our digital strategy is connecting more products in our customers’ fleets, allowing us to help improve their productivity, increase safety and drive sustainability. This alliance will ensure that more used equipment buyers have access to our best-in-class products, digital offerings and world class customer support through the Cat dealer network,” said Rob Charter, group president with responsibility for Caterpillar’s Customer and Dealer Support.
The strategic alliance between Ritchie Bros. and Caterpillar will have an initial five-year term. After completing the acquisition of IronPlanet, Ritchie Bros. will operate live onsite auctions at participating Caterpillar dealers’ locations under the Cat Auction Services brand and also encompass Ritchie Bros.’ other onsite and online brands.
This is the most recent in a series of moves involving Caterpillar. On August 18th, Cat said it was considering unloading some of its underground mining machines including continuous miners, feeder breakers, coal haulage systems, highwall miners, roof bolters, utility vehicles and diesel vehicles. While the review is underway Cat is not taking orders for these machines. A week later, Caterpillar said it will end its six-year alliance with Wacker Neuson and will build its own mini-excavators.