Canadian royalty firm Franco-Nevada acquires Gold Wheaton for C$830 million
15 Dec 2010
Canada's gold-focused royalty company Franco-Nevada Corp Monday agreed to acquire rival Gold Wheaton for approximately C$830 million ($824 million) in a cash-and-stock deal, enhancing the company's position as one of the world's largest gold-focused royalty companies and increasing its leverage in the prices of precious metals.
Royalty companies simply receive a percentage of production from a mine, by investing in a producing asset, without assuming any responsibility for the actual mining operation and incurring any operating and capital costs.
Under the terms of a binding agreement signed between both the companies, Gold Wheaton's shareholders will receive C$5.20 per share, payable 60 per cent in Franco-Nevada shares, and 40 per cent in cash or C$2.08 a share of Gold Wheaton.
The agreed price represents a 23-per cent premium over the 20-day volume-weighted average price of Gold Wheaton shares on the Toronto Stock Exchange (TSX) prior to the announcement.
Further to the acquisition news, Gold Wheaton shares surged 14 per cent to C$4.99 Monday on TSX, while Franco-Nevada dropped 3.8 per cent to C$32.15.
Gold Wheaton, a Vancouver-based gold company generates its operating revenue from the sale of gold and precious metals produced by others. The streams include production from Quadra FNX's Sudbury operations and First Uranium's mine waste solutions and Ezulwini operations.
