Vancouver-based Pan American Silver Corp. (TSX:PAA) announced this morning its acquisition of Minefinders Corporation Ltd. (TSX:MFL) for $1.5 billion.
The sale represents a total value of $15.60 per Minefinders share, and a premium of 36% on Friday’s market close.
Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American.
In a release, Pan American noted the deal would create a growth-oriented, geographically diversified silver producer with combined market capitalization of approximately $4 billion.
With seven mines in operation throughout Latin America, Pan American had set its sights on Minefinders’ Dolores silver and gold property in Mexico, which increased output 200% in the last year.
Pan Am projects the combined company will double its silver production in the next three years, reaching more than 50 million ounces by 2015.
Pan American CEO Geoff Burns said, “Given the location of Minefinders’ assets, we believe this acquisition is logical and consistent with Pan American’s vision to become the largest low-cost primary producer of silver in the world.
“As a producing, long-life, low-cost mine, Dolores will not only add to Pan American’s production, but will help balance our entire portfolio of producing and development assets.”
The deal is expected to close in March. At press time, Pan American’s shares were trading down 9.11% and Minefinders was trading up 23.57% or $2.71 on the day.
Jennifer Harrison
@JHarrisonBIV