Eldorado Gold Bids $3.2 Billion in Stock for Andean Resources
Eldorado Gold Corp., Canada’s fifth- largest producer by market value, offered C$3.4 billion ($3.2 billion) in stock for Australia’s Andean Resources Ltd., which said it’s in talks for a rival transaction.
Eldorado offered 0.310 a share for every one of Perth-based Andean’s stock, valuing each at C$6.36, the Vancouver-based company said in a statement. That’s 32 percent more that Andean’s closing price yesterday in Toronto.
Global gold mining takeovers are at record this year as producers are discovering less metal while the bullion price has advanced each year since 2000. Buying Andean will give Eldorado Chief Executive Officer Paul Wright a 2.1 million ounce project in Argentina, adding to assets in Brazil and China.
“It goes to show that good deposits are hard to find and there’s a premium to be paid,” David Baker, managing partner at Sydney-based Baker Steel Capital Managers, said by phone. “There’s more consolidation to come.”
Andean’s Sydney-traded shares rose 31 percent today before the stock was halted. The company’s Toronto-traded stock closed yesterday at C$4.81, while Eldorado closed at C$20.53.
“The company has requested a trading halt as it is currently in discussions with another party which it expects to lead to a major corporate announcement,” Andean said today in a statement to the Australian stock exchange. It also noted the Eldorado statement and said it was “not yet in a position to make an announcement regarding its discussions.”
There have been 290 gold deals done this year so far worth $38.4 billion, according to data compiled by Bloomberg. Bullion advanced to a record $1,266.50 in June and is set for a 10th straight annual gain, the longest winning streak since at least 1920, attracting investment by fund managers including George Soros and John Paulson.
“The transaction is consistent with Eldorado’s stated strategy of building a geographically diversified, low cost, high growth gold producer,” said Eldorado’s Wright, who agreed in August last year to pay C$1.47 billion for Sino Gold Mining Ltd.
Eldorado’s written proposal on Aug. 30 followed an initial approach on Aug. 18, which was rejected by the Australian company, the company said in a statement. Eldorado said the proposed transaction will create the world’s fastest-growing and lowest-cost gold producer.