Canadian miner Kirkland Lake Gold Ltd said on Monday it would buy smaller rival Detour Gold Corp for about $4.89 billion in an all-stock deal, as it looks to scale up its mining operations and boost reserves.
Kirkland Lake Gold offered 0.4343 shares to Detour Gold shareholders for each share held.
Acquisitions in the sector have been scarce in recent years as miners focused on cost cutting, but the need to bolster shrinking reserves to boost growth and take advantage of rising gold prices are providing the impetus for consolidation.
The deal, representing a premium of 23.8 per cent as on Friday’s close, is expected to generate pre-tax savings of about $75 to $100 million per year, the companies said in a statement.
On completion of the deal, Kirkland Lake Gold and Detour Gold shareholders will own about 73 per cent and 27 per cent, respectively, of the merged company.
RBC Capital Markets was financial adviser to Kirkland Lake Gold and BMO Capital Markets to Kirkland Lake Gold.
© Thomson Reuters 2019
