Nevada-based Meridian Gold Inc. (TSX:MNG) has rejected Yamana Gold Inc.'s (TSX:YRI) larger bid for the company, which is part of a three-way merger with Vancouver-based Northern Orion Resources Inc. (TSX:NNO).
Meridan said the revised bid still falls short in recognizing the company's full value and doesn't adequately compensate shareholders for the value of future production from the company's operations under development.
Yamana had increased the cash portion of its offer by $0.85 per share to $4 plus 2.235 Yamana shares. However, Meridan said the 2.9% increase in the cash portion was not significant enough to warrant accepting the bid.
A failed attempt at buying Meridian could unravel Yamana's Northern Orion acquisition.
In late June, Yamana had announced it would acquire Northern Orion for $1.1 billion, offering Northern Orion shareholders $7.28 per share or a 28.4% premium on the 20-day average trading price prior to the announcement.
The deal, however, was contingent on Yamana's acquiring at least two-thirds of Meridian's shares.
Despite Meridian's rejection, Yamana and Northern Orion are still recommending their shareholders approve the merger. A vote is expected August 22.
The deal would create a mid-tier gold producer with estimated annual gold production of more than 1.4 million ounces by 2009.
Northern Orion's share price range during the past week: between $4.67 and $5.35; 52-week high: $6.53; 52-week low: $3.85.