Australia's Regis to take over Vault, creating $7.7 billion gold producer
Regis shareholders will own about 51% of the combined entity and Vault shareholders the rest, the companies said.
SEATTLE (Scrap Monster): Regis Resources will take over smaller peer Vault Minerals to create Australia's third-largest listed gold producer valued at around A$10.7 billion ($7.67 billion).
The combination, backed by both boards, would create an entity with five operating mines in Western Australia and two growth projects, which would produce 700 million ounces of gold a year.
The deal is set to unlock over A$500 million in corporate tax benefits and offer scale that will improve procurement and capital costs for the combined entity, executives of both companies said on Tuesday.
The deal comes amid a surge in bullion prices over the past year that has encouraged consolidation among mid-tier producers.
It also comes as central banks around the world add to their gold holdings, partly to diversify against fiat currencies amid geopolitical uncertainty.
Under the all-scrip deal, Regis has offered 0.6947 of its share for each Vault share, implying a deal value of A$5.15 billion, according to a joint statement.
The offer represents a 10.7% premium to Vault's last close of A$4.50 on Monday.
Shares of Vault jumped as much as 6.4% in their biggest intraday surge since early April. Regis' stock fell as much as 6.1% to hit a one-month low.
Regis shareholders will own about 51% of the combined entity and Vault shareholders the rest, the companies said.
Regis CEO Jim Beyer, who will stay on to lead the merged entity, said on an analyst call, 'By combining the two businesses we are creating a stronger company with greater scale, improved diversification and a stronger balance sheet.'
Broker Ord Minnett called the deal 'a positive step forward' given the increased scale of the merged entity, that offered 'a strong platform to enhance the portfolio further through potential M&A/growth options.'
Last year, Ramelius Resources took over smaller peer Spartan Resources in a A$2.4 billion deal, riding on a wave of consolidation in the sector driven by rallying gold prices.
The boards of Regis and Vault unanimously recommended the deal, subject to no superior proposal emerging.
Courtesy: www.reuters.com