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Canadian precious metals miner SSR Mining (NASDAQ, TSX: SSRM) has agreed to buy Alacer Gold (TSX: ASR, ASX: AQG) in an all-stock, zero-premium deal valued at C$2.41 billion ($1.72 billion).
Under the terms of the agreement, Alacer shareholders will receive 0.3246 of an SSR share per Alacer share held, which equates to a consideration of C$8.19 per share ($5.84) – matching Alacer’s closing price on the TSX last Friday.
On closing, SSR and Alacer shareholders will collectively own approximately 57% and 43% of the combined entity respectively.
The combined business would have a three-year average annual production profile of approximately 780,000 oz gold equivalent
“Our focus at Alacer over the past several years has been on generating peer-leading free cash flow – this merger allows us to continue this strategy while diversifying our single operating asset exposure,” Alacer chief executive Rod Antal said in the media release.
The new company, which will continue to operate as SSR Mining and be headquartered in Denver, will be led by Antal as president and CEO and Michael Anglin as chairman.
The new board of directors would comprise five directors from each of the current SSR and Alacer boards for a total of 10 directors, including the CEO.
The merger would create a diversified precious metals producer with assets spanning four countries, adding Alacer’s flagship Çöpler mine in Turkey to SSR’s existing portfolio that includes the Marigold gold mine in Nevada, the Seabee gold operations in Saskatchewan and the Puna operations in Jujuy, Argentina.
Last year, Çöpler produced 391,213 ounces of gold, which led to nearly $215 million in unlevered cash flow for Alacer.
The combined business has a three-year average annual production profile of approximately 780,000 oz gold equivalent at an all-in sustaining cost (AISC) of $900/oz and generate about $450 million in yearly free cash flow.
The merger is subject to Alacer shareholder approval, while SSR shareholders will vote on the share issuance tied to the deal. Both votes are expected to be held in July.
SSR has a right to match any superior proposals, and there is a $70 million reciprocal termination fee applicable to both companies.
Shares of SSR Mining and Alacer Gold were down 8.0% and 7.2% respectively on the TSX at noon EST, erasing the gains recorded at market open Monday.
Comments
The_Signal_and_the_Noise
Why would Alacer’s stockholders approve this deal? From my POV, I don’t see any upside to this transaction. If someone has a valid thesis, please enlighten me 🙂