Canadian gold miner SSR Mining to buy Alacer in $1.7 billion deal
12 May 2020
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Canadian precious metals producer SSR Mining is acquiring Alacer Gold in an all-stock deal that values the latter at C$2.41 billion ($1.72 billion), in a move to benefit from soaring gold prices.
SSR Mining Inc and Alacer Gold Corp on Monday announced the signing of a definitive agreement to combine in an at-market merger of equals pursuant to a plan of arrangement under the Business Corporations Act.
As per the agreement, Alacer shareholders will receive 0.3246 SSR Mining shares for each Alacer share held. The exchange ratio, together with closing prices for both SSR Mining and Alacer common shares on the Toronto Stock Exchange on 8 May 2020, implies a consideration of C$8.19 per Alacer common share and a combined market capitalisation of approximately $4 billion.
At closing, SSR Mining and Alacer shareholders will collectively own approximately 57 per cent and 43 per cent of SSR Mining, respectively, on an issued and outstanding share basis.
The combined entity will continue as SSR Mining Inc and will be headquartered in Denver, Colorado with a corporate office in Vancouver, BC and will be led by Rod Antal as president and CEO and Michael Anglin as chairman.
On completion of the transaction, the new board of directors will have five directors each from SSR Mining and Alacer boards of directors for a total of 10 directors, including the CEO.
The transaction creates a diversified portfolio of high quality, long life operating assets across four jurisdictions with 3-year average annual production of 780 koz, valued at $900/oz .
Based on consensus estimates, the combined entity is expected to generate peer leading average annual pro forma free cash flow of $450 million (2020-2022), well ahead of a peer group annual average of $275 million.
The merged entity will have a strong balance sheet with consolidated cash and marketable securities of $700 million to support growth pipeline and facilitate capital returns evaluation.
Three significant district scale land packages in USA, Canada, and Turkey offers attractive growth portfolio of low capital intensity greenfield and brownfield opportunities.
“The zero-premium merger of SSR Mining and Alacer creates an exciting leading intermediate gold producer with exceptional financial strength, robust margins, strong cash flow generation, and long mine lives that will be run by highly experienced management with a track record of value creation,” Paul Benson, president and CEO of SSR Mining, said.
“The combination of Alacer and SSR Mining will create a diversified portfolio of high quality, long-life mines across four mining-friendly jurisdictions. 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,” Rodney P Antal, president and CEO of Alacer, said.
Under the terms of the agreement, the transaction will be carried out by way of a court approved plan of arrangement under the Business Corporations Act (Yukon) and will require the approval of at least 66-2/3 per cent of the votes cast by the shareholders of Alacer at a special meeting. The issuance of shares by SSR Mining under the agreement is also subject to the approval of the majority of votes cast by the SSR Mining shareholders at a special meeting.
Completion of the transaction is also subject to regulatory and court approvals and other customary closing conditions. The agreement includes customary provisions, including nonsolicitation of alternative transactions, a right to match superior proposals and a $70 million reciprocal termination fee payable under certain circumstances.
The boards of SSR Mining and Alacer have unanimously approved the transaction and recommend that shareholders vote in favour of the transaction.
National Bank Financial Inc acted as exclusive financial advisor to SSR Mining and McCarthy Tétrault LLP and Lawson Lundell LLP acted as legal counsel to SSR Mining. TD Securities Inc acted as financial advisor to the special committee of independent directors of SSR Mining.
Scotiabank acted as exclusive financial advisor to Alacer and Stikeman Elliott LLP acted as legal counsel to Alacer. The board of directors of Alacer also retained CIBC World Markets Inc to provide a fairness opinion.
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