Sprott makes $898m unsolicited bid for gold/silver trusts – by Scott Deveau (Bloomberg News – April 23, 2015)

Video interview from Business Network News: http://www.bnn.ca/


Sprott Asset Management LP plans to make an unsolicited offer to buy Central GoldTrust and Silver Bullion Trust for almost $900 million, saying the precious metals companies are undervalued.

The share swap by Sprott, a Toronto-based money manager that focuses on gold and silver, represents an 8.3 percent premium to the trusts’ combined market value of $829 million, based on Wednesday’s closing price.

The Canadian trusts, which buy and hold gold and silver, have been under pressure from shareholder Polar Securities Inc., a Toronto-based hedge fund. Polar has been urging the trusts to change how unitholders can redeem their investment as a means of closing their trading gaps.

Sprott aims to use its broader marketing platform and investor relations expertise to close the gap between their unit price and their net asset value. Sprott projects it will add about $3.33 per unit in value to Central GoldTrust and 96 cents a unit to Silver Bullion, the company said in a statement Thursday.

“We have a proven track record and the best-in-class platform needed to address the persistent trading discounts,” said John Wilson, Sprott’s chief executive officer, in the statement.

Hostile or unsolicited takeover bids are rare in Canada. Since 2010, they account for less than 1 percent of the takeovers in the country, or about 35 of the 5,770 transactions over that period, according to data compiled by Bloomberg.

Trading Discount

Under the terms of the bid, Sprott would exchange units of its own trusts, Sprott Physical Gold Trust and Sprott Physical Silver Trust, for units of Central GoldTrust and Silver Bullion on a net asset value basis.

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