NEW YORK (TheStreet) -- Shares of Ritchie Bros. Auctioneers (RBA) were spiking 23.71% to $35.74 in late-afternoon trading on Tuesday as the Canadian industrial auctioneer is purchasing IronPlanet for $758 million.
IronPlanet is a Pleasanton, CA-based e-commerce site that is backed by construction and mining equipment manufacturer Caterpillar (CAT). The site sells used and heavy construction equipment.
As part of the deal, Ritchie Bros will become Caterpillar's partner for live and on site auctions of used Caterpillar equipment.
Oppenheimer analysts called the deal "logical and opportunistic" as Ritchie Bros. expands IronPlanet's base model, which has primarily centered around unreserved auctions at physical locations, according to TheFly.
The acquisition creates a more diversified, multi-channel company with a bigger scale. It also increases Ritchie Bros "addressable market" and boosts its digital capabilities, the firm continued in their analyst note.
Oppenheimer has a "perform" rating on Ritchie Bros. stock.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates Ritchie Bros Auctioneers as a Buy with a ratings score of B+. This is driven by some important positives, which it believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and increase in stock price during the past year. The team feels its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: