Coeur d’Alene Mines Corp., an Idaho-based silver producer, offered to buy Orko Silver Corp. for C$379.9 million ($379 million) in cash and shares in an attempt to trump a rival bid from First Majestic Silver Corp.
The offer values Orko at C$2.70 a share, a 26 percent premium to First Majestic’s all-stock bid based on yesterday’s closing price, according to Bloomberg calculations. First Majestic has until midnight Pacific time on Feb. 19 to match the proposal, which Orko’s board has determined is superior, Coeur d’Alene said in a statement today.
The value of Vancouver-based First Majestic’s bid, announced at C$2.72 a share, has dropped as its stock has declined since the proposal was made public on Dec. 16. First Majestic and Coeur d’Alene are seeking control of Orko’s La Preciosa silver project in Mexico, which may contain as much as 110 million ounces of silver, according to Orko’s website.
Coeur’s offer “comes as a surprise to us given that Orko had run a formal process last year,” Daniel Earle, an analyst at TD Securities Inc., said in a note today. “It is possible that First Majestic could introduce a significant cash component in a revised offer to match Coeur’s proposal.”
Keith Neumeyer, chief executive officer of First Majestic, declined to comment in an e-mail today.
Orko gained 22 percent to C$2.60 at the close in Toronto, the biggest rise since First Majestic’s bid was announced. Orko has increased 65 percent since Dec. 14.
Coeur d’Alene is offering holders of Vancouver-based Orko a mix of stock or warrants and cash for their shares. The company fell 10 percent to $21.06 in New York. First Majestic rose 1 percent to C$18.17.
“We have a demonstrated track record of developing, commissioning and operating large-scale precious metals assets as well as the financial resources necessary to bring Orko’s La Preciosa project into production,” Coeur d’Alene CEO Mitchell J. Krebs said in the statement.
Silver futures for March delivery slid 0.5 percent to settle at $30.869 an ounce on the Comex in New York. Prices have gained 2.1 percent this year.
First Majestic’s Orko bid was one of two announced takeovers of silver companies last year. The other was the company’s acquisition of Silvermex Resources Inc., according to data compiled by Bloomberg. The total value of the deals was $490.1 million with an average premium of 51 percent, the data show.
JPMorgan Chase & Co. is Coeur’s financial adviser on the transaction and Fasken Martineau DuMoulin LLP and Gibson, Dunn & Crutcher LLP are its legal advisers. BMO Capital Markets and GMP Securities LP are Orko’s financial advisers and Stikeman Elliott LLP is its legal adviser.
Coeur, which mines in Mexico, Bolivia and the U.S., also said today it’s offering to repurchase all of its 3.25 percent convertible senior notes due 2028. There were $48.6 million of notes outstanding as of Feb. 12, it said.