In a coming together of two construction machinery giants, used equipment from the world’s largest manufacturer—Caterpillar—will be sold by the world’s largest equipment auctioneer—Ritchie Bros. The global strategic alliance dovetails with Ritchie Bros.’ agreement to purchase its major online competitor, IronPlanet, for $758.5 million.
IronPlanet investor Caterpillar Inc., Peoria, Ill., announced Aug. 29 a strategic alliance agreement with Ritchie Bros. Auctioneers, Vancouver, British Columbia, under which the Canadian-based company will become Caterpillar’s preferred global partner for live onsite and online auctions. The agreement will, says Caterpillar, both complement its existing dealer channels and enhance its delivery of Internet-of-things connectivity offerings to improve customer fleet utilization.
“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,” said Rob Charter, Caterpillar group president with responsibility for customer and dealer support, in a statement. “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.”
At the same time, Ritchie Bros. announced it had reached an agreement to acquire Pleasanton, Cal.-based IronPlanet, the leading survivor of the Internet-based equipment auction business with $3 billion in annual online equipment sales. Many online auction firms exploded at the turn of the century as a major threat to traditional iron auction companies led by Ritchie Bros. Current investors in IronPlanet, which has recently expanded into a wider range of online auction categories, include Accel Partners, KPCB, Caterpillar and Volvo Construction Equipment.
The new strategic alliance between Ritchie Bros. and Caterpillar replaces and expands on existing agreements in place between Caterpillar, its dealers and IronPlanet. The deal will become effective when Ritchie Bros. completes its acquisition of IronPlanet, which is subject to regulatory clearances.
“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,” said Ravi Saligram, Ritchie Bros. chief executive officer of Ritchie Bros., in a statement.
This consolidation comes after both auctioneers have fought to preserve their footholds. For example, a Chinese equipment importer recently filed an antitrust suit against Caterpillar, Komatsu and Volvo over a collapsed deal with IronPlanet. Prior to that, IronPlanet sued Ritchie Bros., claiming it caused a breach of contract by offering a higher commission rate. Prior to the Internet explosion, Ritchie Bros. also bought a major competitor, U.S.-based auctioneer Forke Bros.
The strategic alliance between Ritchie Bros. and Caterpillar will have an initial five-year term. After completing the IronPlanet acquisition, Ritchie Bros. will operate live onsite auctions at participating Caterpillar dealers’ locations under the Cat Auction Services brand as well leverage other Ritchie Bros. onsite and online brands.