Zero-Premium Mergers Becoming the New Normal Among Gold Miners – by Aoyon Ashraf (Bloomberg News – June 10, 2020)

Gone are the days of paying high premiums to acquire mining companies or assets.

After going through a prolonged bear market since 2013, miners have become more composed, and in this new bullish gold cycle paying a zero premium to merge two companies may become the new normal.

Deal-making among gold miners has picked up since the precious metal’s latest rally began in mid-to-late 2018. However, unlike in past bull markets, miners have been more careful to do deals that consolidate assets to minimize costs and maximize shareholder returns.

Recent mergers of equals — with no premium paid by the buyer — suggest there isn’t a need for hundreds of different companies with multiple assets and management teams, said Dan Barnholden, PI Financial’s managing director and co-head of investment banking.

Shareholders will applaud deals where executives put together very similar assets and cut corporate overhead, while creating bigger companies with increased liquidity, he said.

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