Agnico Eagle Mines Ltd. plans to acquire Kirkland Lake Gold Ltd. in an all-stock transaction that the companies say will create a “true Canadian mining champion,” but the deal garnered a lukewarm reception on Bay Street, with some investors questioning the strategic rationale.
Toronto-based Agnico said on Tuesday it intends to pay 0.7935 of its shares for each Kirkland share, or about 1 per cent higher than Kirkland’s average close over the 10-day period as of last Friday, essentially making it a nil-premium deal valued at more than $13-billion.
Over the past few years, zero-premium deals have gained in popularity, with Barrick Gold Corp. acquiring Randgold Resources Ltd. in one such agreement for US$6-billion in 2018 that was widely lauded by shareholders.
This deal didn’t have as enthusiastic a reaction, partly because the news leaked out ahead of time, driving up shares in Kirkland. On Monday, the mining blog IKN reported that several big companies, including Barrick Gold, Newcrest Mining and Newmont Mining, were in contention to buy Kirkland.