Vancouver’s mining sector produced another major takeover transaction Monday as gold prices continued to trade at near-record highs.
Toronto-based precious metal streamer Franco-Nevada Corp. (TSX:FMV) announced a deal to buy Vancouver’s Gold Wheaton Gold Corp. (TSX:GLW) Monday morning for $830 million.
The deal propelled a 15% value increase to $5.04 in Gold Wheaton shares by midday trading, and came as the Toronto Stock Exchange was up 114.79 basis points to 13,354.26 and the price per ounce of gold pushed up against the $1,400 threshold.
The cash-and-share deal would see Franco-Nevada acquire Gold Wheaton for approximately $5.20 per share.
On a fully diluted basis, the value of the deal exceeds $1 billion.
David Cohen, chairman of CEO of Gold Wheaton, said the takeover is a good deal for shareholders who have watched the company grow into a significant metals streamer in only two-and-a-half years.
Metal streaming companies provide up front cash payments in exchange for a percentage of the metal produced from a mine.
“The addition of Gold Wheaton cash flow will position Franco-Nevada as the clear leader in the gold royalty sector,” Cohen said.
The deal represents a 19% premium to the closing price of Gold Wheaton shares on December 10.
The takeover, if approved on January 5, will generate significant cash flow for another Vancouver company.
Quadra FNX Mining Ltd. (TSX:QUX), which has a 34.5% stake in Gold Wheaton, has agreed to sell its portion of the company to Franco-Nevada for $4.65 per share.
That deal will generate $262 million for Quadra, which president and CEO Paul Blythe said would help the company develop its Sierra Gorda and Victoria projects.
This latest takeover in Vancouver’s mining sector comes after deals that have seen Thompson Creek Metals Co. Inc. (TSX:TCM) buy Terrane Metals Corp. for $650 million, Goldcorp Inc. (TSX:G) buy Andean Resources Ltd. for $3.6 billion and Kinross Gold Corp. (TSX:K) swallow Red Back Mining Inc. for US$7.1 billion.