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First Majestic Silver announces friendly acquisition of SilverCrest Mines

First Majestic Silver announces friendly acquisition of SilverCrest Mines

Photo by Bloomberg

27th July 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Mexico-focused precious metals miner First Majestic Silver has agreed to acquire all of the issued and outstanding common shares of SilverCrest Mines in a cash-and-scrip deal.

The company advised on Monday that the transaction would enhance First Majestic's position in Mexico, one of the world's most prolific silver and gold regions. SilverCrest's Santa Elena mine would become First Majestic's sixth producing silver mine, while the deal would also strengthen First Majestic's balance sheet by about C$30-million in cash.

“Shareholders stand to gain significant upside in the combined company with production of well over 20-million silver equivalent ounces a year while maintaining one of the lowest production costs and highest purity to silver in the industry,” First Majestic president and CEO Keith Neumeyer said in a statement.

Under the terms of the deal, SilverCrest shareholders would receive 0.2769 of a First Majestic common share and C$0.0001 in cash for every SilverCrest common share.

The offer implied a value of C$1.30 for each SilverCrest share based on the closing price of First Majestic's common shares on the TSX on Friday.

The offer represented a premium of about 37% to SilverCrest's 30-day volume-weighted average price on the TSX up to Friday and a 35% premium to SilverCrest's previous closing price.

The transaction would be implemented by way of a plan of arrangement under the Business Corporations Act (British Columbia).

The SilverCrest board had unanimously approved the transaction and would provide a written recommendation that SilverCrest shareholders vote in favour of the transaction.

SilverCrest shareholders would also receive shares in a newly formed company that would hold certain exploration assets currently held by SilverCrest and First Majestic.

According to the definitive agreement, First Majestic would issue about 32.8-million common shares, valuing SilverCrest's equity at about C$154-million, based on current closing prices.

After the transaction had closed, SilverCrest shareholders would hold about 21% of the issued and outstanding shares of First Majestic.

The arrangement would also require First Majestic to issue about 2.9-million replacement stock options at exercise prices adjusted by the exchange ratio (assuming no exercise of existing SilverCrest options) to SilverCrest option holders who did not exercise such options before the effective time of the arrangement.

Further, each SilverCrest shareholder would also receive 0.1667 common shares of New SilverCrest for each SilverCrest common share held.

The arrangement agreement included customary provisions, including non-solicitation of alternative transactions, right to match superior proposals and fiduciary-out provisions. SilverCrest had also agreed to pay a termination fee to First Majestic of C$8-million upon the occurrence of certain events. First Majestic and SilverCrest had each agreed to pay a C$1-million expense reimbursement fee to the other party upon termination of the agreement under certain circumstances.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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