Tahoe Resources takes over Rio Alto in $1.3B deal
Gold and silver producer would be focused on Latin America
Rio Alto Mining shares jumped 10 per cent in early trading Monday after it agreed to a friendly takeover by Tahoe Resources Inc. which would become a mid-sized silver and gold producer focused on Latin America.
Rio Alto's stock gained 34 cents to $3.62 on the Toronto Stock Exchange shortly after the market opened while Tahoe shares dropped $1.49 to $16.15.
Tahoe's friendly offer valued Rio Alto at about $1.3 billion, based on Friday stock prices for the two companies.
Under the proposal, Rio Alto shareholders will receive 0.227 of a Tahoe share and one-tenth of a cent cash per share, making the offer worth about $4 per share based on Tahoe's share price before the deal was announced.
If a competing offer emerges, Tahoe will have an opportunity to match its rival's bid and would receive a $57.6 million termination fee under certain circumstances.
Tahoe's main holding is the Escobal silver mine in Guatemala, which has been in commercial productions since January 2014.
The boards of both companies are supporting the proposed deal, which requires approvals from shareholders of both companies.
Goldcorp Inc. has about 39 per cent of Tahoe's shares and has agreed to support the deal.
The companies anticipate the deal will close by early April.