Timmins Gold (TSX-V:TMM) has sweetened a takeover deal for Capital Gold (TSX:CGC) just days before Capital’s shareholders vote on a merger with another company.
On Tuesday, the Vancouver-based gold producer upped its offer for Capital Gold by US$0.25 per share.
The increased offer provides Capital shareholders with a total consideration of US$5.89 per share, valuing the New York-based gold producer at approximately $361 million.
Timmins said Tuesday the offer exceeds a proposed merger between Capital Gold and Gammon Gold (TSX:GAM) by US$0.47 per share.
“Following numerous meetings with Capital Gold shareholders, we know there is widespread support for the merger of Timmins Gold and Capital Gold, including from some of Capital Gold’s largest institutional shareholders,” commented Bruce Bragagnolo, CEO of Timmins.
“In light of our increased offer, we urge the board of Capital Gold to determine that our new proposal is superior to the Gammon offer, and to withdraw its support for the Gammon transaction.”
At the centre of the takeover battle is Capital’s El Chanate asset, an open pit gold mine in Sonora, Mexico.
The mine is located near Timmins’ San Francisco gold mine, which began pouring gold last year.
Gammon also has mines in Mexico.
But Timmins’ revised bid for Capital might not go as planned.
Capital urged its shareholders on Tuesday to vote in favour of the Gammon Gold merger, adding that its board of directors is unanimously in favour of the deal.
Timmins has maintained that the Gammon merger “significantly” increases Capital’s exposure to underperforming assets.
At press time, Timmins’ shares were down 5% to $2.30; Capital’s shares were down 3.6% to $5.02; and Gammon’s shares were down 4.3% to $8.24.