McCarthy Tétrault assists in billion-dollar M&A deals in auto, real estate sectors

Blakes, Osler, Stikeman Elliott, Goodmans also legal advisors in deals this week

McCarthy Tétrault assists in billion-dollar M&A deals in auto, real estate sectors

McCarthy Tétrault advised two M&A deals this week, including Ritchie Bros.’ $9.79-billion (US$7.3 billion) acquisition of a US-based online platform for vehicle auctions. Blakes also advised the Ritchie Bros. deal, while Osler, Stikeman Elliott and Goodmans joined McCarthy Tétrault in the $5.9-billion sale of an Ontario-based real estate investment trust to Dream Industrial and GIC. Also in this deals roundup is Northleaf buying a majority stake in a US-based internet provider.

Ritchie Bros. to acquire US-based IAA for $9.8 billion

Ritchie Bros. Auctioneers Incorporated, a Burnaby-based asset management and disposition company, agreed to acquire US-based IAA, Inc., an online platform for vehicle auctions, for approximately $9.79 billion (US$7.3 billion).

McCarthy Tétrault LLP is serving as Canadian legal counsel to Ritchie Bros. and Goodwin Procter LLP and Skadden, Arps, Slate, Meagher & Flom LLP as US counsel.

Goldman Sachs & Co. LLC, Guggenheim Securities, LLC, Evercore Inc. and RBC Capital Markets Inc. are acting as financial advisors to Ritchie Bros., with Goldman Sachs & Co. and Guggenheim Securities as co-leads.

Blake, Cassels & Graydon LLP and Cooley LLP are serving as Canadian and US legal counsel, respectively, to IAA, and J.P. Morgan Securities LLC as financial advisor.

Upon deal completion, Ritchie Bros. shareholders will own approximately 59 percent of the combined business and IAA shareholders will own approximately 41 percent.

The deal received the unanimous support of both sets of board directors.

“IAA accelerates our journey to become the trusted global marketplace for insights, services, and transaction solutions," said Ritchie Bros CEO, Ann Fandozzi. “Their highly complementary business in an adjacent vertical will allow us to unlock additional growth. Through our trusted brands, similar operating model, and complementary services, we expect to drive efficiencies and create a more resilient business."

“Together, IAA and Ritchie Bros. will have expanded global operations, accelerating international buyer development and enhancing ancillary services such as transportation and finance,” said IAA CEO and President, John Kett. “The transaction will also provide compelling value to stockholders through the immediate cash component and the opportunity to participate in the substantial growth potential of our combined company with significant resources.”

The deal is anticipated to close in the first half of 2023, subject to customary closing conditions.

Dream Industrial, GIC to buy Summit for $5.9 billion

Dream Industrial REIT and Singapore's sovereign wealth fund GIC have agreed to acquire Ontario-based Summit Industrial Income REIT in a $5.9-billion joint venture with an ownership structure of 90 percent and 10 percent, in favour of GIC.

McCarthy Tétrault LLP is serving as legal counsel to Summit and BMO Capital Markets as exclusive financial advisor.

Osler, Hoskin & Harcourt LLP and King & Spalding LLP are serving as Canadian and US legal counsel, respectively, to Dream.

Stikeman Elliott LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as Canadian and US legal counsel, respectively, to GIC.

Goodmans LLP is serving as legal counsel to Dream’s special committee and Scotiabank as financial advisor.

“We are pleased to provide an immediate and certain premium value to our unitholders through this all-cash transaction with GIC and Dream," said Summit CEO and Trustee, Paul Dykeman. “The entire Board of Trustees and management team are proud to have executed on our strategy to develop and aggregate an attractive, diversified portfolio with a team that is dedicated to delivering best-in-class services to our tenants, and this value optimization transaction represents a successful culmination of these efforts. We are confident this transaction is in the best interest of the REIT and unitholders.”

GIC Chief Investment Officer of Real Estate, Lee Kok Sun, said, “We are pleased to bring GIC's expertise in real estate investing together with Dream's 25 years of experience as a world-class real estate developer, owner and asset manager. Through our partnership, Summit's assets will be positioned for continued success.”

Dream Group of Companies Founder and Dream Industrial REIT Trustee, Michael Cooper, said, “We have been impressed by Summit and their continued strong execution and we are thrilled to welcome an exceptional team to Dream. Summit's business fits perfectly with Dream's experience and management expertise, and we look forward to partnering with GIC.”

The deal is expected to close in the first quarter of 2023, subject to customary closing conditions.

Northleaf purchases majority stake in US-based Mercury Broadband

Northleaf Capital Partners has acquired a majority interest in Mercury Broadband, a US-based provider of high-speed internet and digital phone services for homes and businesses across rural communities in the Midwest.

Wilkinson Barker Knauer, LLP served as legal counsel to Northleaf. Akin, Gump, Strauss, Hauer and Feld LLP served as legal counsel to Mercury Broadband and Truist Securities, Inc. as financial advisor.

Funds managed by Northleaf will invest up to $308.5 million (US$230 million) over the next several years to support Mercury Broadband’s vision.

“The investment by Northleaf represents a major milestone for our company,” said Garrett Wiseman, CEO at Mercury Broadband. “We have ambitious growth plans and, with strong investment partners like Northleaf, we can fulfill our goal of aggressively delivering advanced, high speed Internet services to more underserved communities.”

“We have been impressed by Garrett and the team at Mercury Broadband and are excited to partner with them. Their 10-year long track record of responsibly participating in government programs to help connect communities positions them well in the current environment,” said Chris Rigobon, Director at Northleaf. “Mercury Broadband's commitment to bridging the digital divide is an excellent fit with our communications infrastructure investment strategy and provides our investors with exposure to an attractive sector with a compelling risk/return profile and significant growth potential.”

Construction on the new service sites has already started, with an outlook of serving clients across Kansas, Indiana, Missouri, Michigan, Ohio and Illinois via hundreds of fixed wireless access areas.

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