Sweeter bid sought by some Kirkland Lake Gold shareholders
Agnico Eagle-Kirkland Lake Gold merger upset some shareholders.
Today the two companies announced they were merging. When completed the new company will be a number three gold producer. Kirkland Lake Gold CEO, Tony Makuch, will be CEO of the combined companies. Sean Boyd becomes executive chair.
Kirkland Lake Gold shareholders will receive 0.7935 of an Agnico Eagle common share, a 1% premium to the 10-day volume weighted average prices on the Toronto Stock Exchange.
Some Kirkland Lake Gold shareholders were hoping for a better valuation. Agnico Eagle picked up Kirkland Lake's assets at about 10% discount to market, according to Derek Macpherson, on a Twitter thread.
News of the merger dropped in the morning. Kirkland Lake finished the day down by 7.76% to $51.38 a share by market close.
Twitter was rife with complaints, especially when Kirkland Lake announced early this month that it was boosting its M&I gold resources 216% at Detour Lake.
I cannot see how anyone that owns Kirkland Lake $KL would want to part with their shares at this price. I really question the sanity of the board which is in favor of this decision while having bought back shares much higher. How could you possibly rationalize that?— Bang For The Buck (@Bang4TheBuck) September 28, 2021
If Detour Lake is looking "so promising", what in the h*ll are the doing at $KL giving the co away here at this price?— Mike Barnes aka Cashcosts (@real_MikeBarnes) September 28, 2021
IKN, which kicked off rumors that Kirkland Lake Gold might be in play on Monday, wrote that there are "there are four large players are still in the official bidding process" and singles out Newcrest as being a good fit.
Exploration Insight's Joe Mazumdar told Kitco today that another suitor coming in to beat Agnico Eagle tie up is less likely. There is a large breakup fee that would have to be paid. It would also have to be a hostile bid and at a higher premium, which may be hard to support in this environment.
One synergy that Mazumdar noted was the emphasis on environmental social governance during the Q&A given by the merged companies. In announcing the deal, the two companies said that the "merged company will be an immediate leader in ESG." The companies mines are in first tier mining jurisdictions with access to hydropower.
Oreninc's Kai Hoffmann wonders how this deal will impact Agnico Eagle's exploration work in the Abitibi-Témiscamingue region of Quebec. Hoffmann spoke to Kitco today from Idaho. Agnico may be less interested in doing a deal now it has Kirkland Lake Gold.