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Sweeter bid sought by some Kirkland Lake Gold shareholders

Kitco News

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.

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.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.