Alamos Gold Inc. (TSX: AGI) has made a takeover bid for Canadian mining concern Aurizon Mines Ltd. (TSX: ARZ), offering $792 million.
Aurizon stands to get about C$4.65 ($4.73) or 0.2801 of an Alamos share for each of their own shares in the deal.
The cash offer represents a premium of 36 percent over Aurizon’s closing price as of Jan. 11 in Toronto. Alamos currently holds a 16 percent stake in Aurizon and is seeking to add its Abitibi projects in the northwest of Quebec, Canada.
Aurizon is presently considering the offer.
Bloomberg quotes TD Securities Inc. analyst Steven Green:
“At surface it looks to be off-strategy,” Green, who has a buy recommendation on Alamos, said in a note. “Alamos is a low-cost, open-pit heap leach producer in Mexico and Turkey, while Aurizon is a high-cost underground producer in Quebec.”
This isn’t the first time Alamos has approached Aurizon; such courting began back in 2008, but Aurizon didn’t demonstrate any interest.
The current proposal values Aurizon at as much as 5.2 times earnings prior to taxes, etc. Alamos will not require an investor vote on the deal, since it involves a cash payout of up to C$305 million and the issuance of 23.5 million shares. Aurizon, however, must not adopt a shareholder-rights plan, which could block the kind of takeover Alamos hopes to execute.
Aurizon has eight ongoing projects in Abitibi, including the Casa Berardi mine, while Alamos runs the Mulatos mine and has developing projects in Turkey.
Aurizon shares rose 34 percent to C$4.57 on Monday after the deal was announced, while Alamos saw shares drop 9.9 percent.