On December 8th, Kinross (TSX: K) announced it would be acquiring Great Bear Resources (TSXV: GBR) for C$29 per share, a roughly 31% premium to the then-current stock price, implying a valuation of C$1.8 billion. Great Bear shareholders are able to choose between receiving either C$29 in cash or 3.8564 Kinross shares per Great Bear share. The C$1.8 billion consideration is subject to a maximum cash consideration of C$1.4 million or roughly 75% of the total consideration.
Great Bear Resources currently has 6 analysts covering the stock with an average 12-month price target of C$29, after 3 analysts raised their price target to the buyout price. Out of the 6 analysts, 3 have buy ratings and the other 3 have hold ratings. The street high sits at C$40 from Mackie Research while the lowest 12-month price target sits at C$22.
In Canaccord’s update after the news, they raised their 12-month price target to C$29 from C$27 while downgrading them to a hold rating from a speculative buy rating, saying that the timing of the transaction was in-line with their expectations.
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Canaccord has largely speculated that a larger gold producer would give a bid for Great Bear Resources given “the Tier 1 potential of the Dixie project.” With their first thought being Barrick Gold since its recent property options within the camp.
With that being said, Canaccord does not foresee Barrick Gold coming in with a higher bid for the company, given their “no to low premium acquisitions.” This coupled with Barrick’s recent M&A spree, makes Canaccord believe that any sort of competitive bid from Barrick to be unlikely.
Lastly, Canaccord believes that Kinross’ understanding of Great Bear Resources assets to be “significantly advanced,” and further comments that they believe that with Kinross’ balance sheet and expertise, Canaccord’s own estimates will most likely turn out to be conservative.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
