Ritchie Bros Auctioneers Inc.’s chief executive officer took aim at one of the company’s largest investors, saying Luxor Capital Group’s opposition to a planned acquisition is based on “aggressive forecasts” and faulty math. 

Luxor has launched a proxy fight to stop Ritchie’s US$6 billion takeover of auto-salvage company IAA Inc. The New York-based investment firm filed materials last week that urged shareholders to vote against the deal, citing calculations that it says prove Ritchie is far more valuable as a standalone business. Luxor also accused Ritchie executives of manipulating projections for the company’s core business to make them more pessimistic and strengthen the case for the acquisition.

In a draft letter to shareholders seen by Bloomberg, Ritchie CEO Ann Fandozzi said Luxor’s case is “factually incorrect and based on fundamentally flawed analysis.” Luxor is making “unrealistic assumptions” about how much capital Ritchie needs to reinvest to fuel the growth of its current business of selling industrial and construction equipment, she said. Luxor also made a mathematical error when calculating Ritchie’s enterprise value, Fandozzi said, which caused the investment firm to overstate what the stock might be worth if the IAA deal doesn’t happen.

Luxor Capital, which owns about 4 per cent of Ritchie, said in an emailed statement provided by an outside spokesperson that it “believes in the long-term value” of Ritchie. 

“It’s disappointing to hear that Ms. Fandozzi and her board do not believe in the value of the company they are entrusted to run,” the firm said. The investor’s calculations are based on a cost of capital disclosed by Ritchie’s own financial advisers, it said. “RBA management’s projections are not to be believed.”

The deal has elicited strong opinions on all sides. Some Ritchie shareholders support Luxor’s view that it’s making a mistake by diversifying into the auto-salvage auction business. Others say the Canadian company will benefit from gaining access to IAA’s dozens of salvage yards, which can be used to take delivery of heavy equipment that Ritchie can later auction. And at least one significant IAA shareholder, Discerene Group LP, has said it will vote against the offer because Ritchie isn’t paying enough for the target’s growth potential. 

Shareholders of both companies vote on March 14. 

Ritchie closed at US$61.15 in New York on Wednesday, slightly below its last price before it announced the IAA bid in November. 

IAA finished the trading session at US$41.78. The Ritchie offer is worth nearly US$45 a share, based on Wednesday’s closing values.  

“We think IAA is by itself a troubled asset — and clearly, based on the proxy, there’s no other buyer,” Luxor President Doug Snyder said in an interview last week.