Gold Royalty intends to acquire Elemental Royalties in a deal valued C$130 million
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(Kitco News) -Gold Royalty (NYSE: GROY) announced Monday its intention to pursue an offer to acquire all of the outstanding common shares of Elemental Royalties (TSX-V: ELE) for consideration consisting of 0.27 common shares of Gold Royalty in exchange for each Elemental share.
According to the company’s statement, the offer values Elemental at C$1.78 per share and represents a premium of 37% to Elemental shareholders based upon the closing prices of the Elemental Shares on the TSX Venture Exchange and the Gold Royalty Shares on the NYSE American on December 17, 2021, being the trading day immediately prior to this announcement.
The company said that the offer implies a total equity value for Elemental of approximately C$130 million on a fully diluted, in-the-money basis, and that Elemental shareholders are expected to own approximately 12% of the combined entity upon completion of the transaction.
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"The combination of Gold Royalty and Elemental will create a sector-leading portfolio of 200 strategic royalties. The combined entity will have a balanced portfolio of cash flowing, development and exploration assets owned by premier operating partners and located in Tier 1 mining jurisdictions," the company noted in a press-release.
Also, Gold Royalty pointed out that it initially submitted a premium acquisition proposal to Elemental on October 21, 2021, with the objective of working collaboratively with Elemental to negotiate a mutually-beneficial, board-supported transaction.
Importantly, Gold Royalty added it submitted a further proposal to Elemental on December 15, 2021 and has attempted on several occasions to engage in discussions with Elemental and its board of directors.
"In the absence of any constructive engagement from Elemental in response to Gold Royalty's bona fide, premium proposals, Gold Royalty now intends to take its offer directly to Elemental shareholders," the company said.
Gold Royalty's diversified portfolio currently consists of net smelter return royalties on gold properties located in the Americas.