Guyana Goldfields (TSX: GUY) this evening announced that it has declined the offer by Gran Colombia Gold Corp (TSX: GCM) to perform a three way merger with that of Gold X Corp (TSXV: GLDX). The deal had initially been proposed by Gran Colombia as a means of aggregating several Latin America operators to create an intermediate Latin American gold producer.
Guyana has elected to decline the proposal by that of Gran Colombia, despite it being a superior offer to that from Silvercorp Metals (TSX: SVM). The rational behind declining the superior offer was that the difference between the offers was not enough to sufficiently compensate shareholders for the risk associated with the transaction. Other details cited include that the transaction is complex and and highly conditional in nature, it requires approval from three separate sets of shareholders, and it did not provide short term liquidity to cover the $3.65 million break fee associated with the Silvercorp transaction.
The unsolicited offer for acquisition made by Gran Colombia was submitted on May 11, just two days ago. The proposal included an exchange ratio of 0.142 Gran Colombia shares for each Guyana share held, the equivalent of $0.90 per share. Comparatively, the current offer from Silvercorp consists of $0.60 in cash per share, or 0.1195 of a Silvercorp share which as of Friday equated to an equivalent $0.69 a share.
Gran Colombia and Gold X Corp have yet to respond to the declined offer. It should be noted that as of Monday, Gran Colombia currently holds a 5% stake in Guyana Goldfields.
Information for this briefing was found via Sedar, Silvercorp Metals, Gran Colombia Gold, Gold X Corp and Guyana Goldfields. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.