Mergers, acquisitions and partnerships have been dominating the news early in 2012. Biotechs have been gobbling up juniors; notably Valeant Pharmaceuticals (TSX:VRX) who has been on an absolute rampage with acquisitions over the last year, including buying Brazil's Probiotica for $85 million a week ago after an unsuccessful attempt to acquire ISTA Pharmaceuticals (NASDAQ:ISTA).
Coinstar (NASDAQ:CSTR) just partnered with Verizon (NYSE:VZ) to take a bigger bite of the content subscription services market as well as Viacom (NASDAQ:VIA) and Amazon.com (NASDAQ:AMZN) now nearing a deal in the same space. The list goes on and on with 2012’s M&A and strategic alliance deals.
The mining industry is active as well with plenty of buy-out deals including this week’s Glencore’s and Xstrata’s efforts to create one of the largest mining companies in the world.
Late Tuesday night, mineral explorer Eurasian Minerals Inc. (TSX-Venture:EMX) (AMEX:EMXX) threw its hat into the merger ring sending shares of natural resource company Bullion Monarch Mining, Inc. (OTCQB: BULM) firing out of the gate Wednesday morning after news that Eurasian has entered into a definitive agreement with BULM to merge Bullion with a wholly-owned subsidiary of EMX.
Eurasian Minerals currently has projects in 10 countries on four continents, and generates wealth via grassroots prospect generation, strategic acquisition, royalty growth and merchant banking.
Per the agreement, Eurasian Minerals will acquire all of the outstanding shares of BULM for which BULM shareholders will receive 0.45 of an EMX common share and 11 cents in cash for each share of BULM held. Shares of EMX are holding around $2.60 each currently with shares of BULM at $1.10 with Wednesday’s increase in value. The deal values Bullion Mining at $45.8 million, a 64% premium to the 30-day VWAP (volume weighted average price) prior to the February 7 announcement. The companies expect the merger to happen in the second quarter of 2012.
The transaction is still subject to customary approvals, including approval of the Bullion Mining shareholders. Officers, Directors and significant shareholders totaling about 44% control of the company have already agreed to the merger.
With regards to Bullion Mining executives, it is expected that Bullion Mining President James (Andy) Morris will become a member of the Eurasian Minerals’ board of directors and BULM chairman and CEO R. Don Morris will join the EMX advisory board.
The combined company will hold more than 145 properties on five continents, as well as a currently paying 1% gross smelter return (GSR) royalty on several of Newmont Mining Corporation's (TSX:NMC) operations and projects on the Carlin Trend in Nevada, including the Leeville mine and the Four Corners project. This royalty paid BULM more than $20 million in the last six years and more than $6 million in fiscal 2011 alone.
While the deal boded well for BULM shareholders instantly -- shares rose more than 36% in Wednesday’s trading -- it should serve shareholders of EMX quite well in the near term also by adding the significant revenue of BULM to the Eurasian Minerals’ books and bolstering the size of their portfolio of holdings. Shares of EMX slipped at the open, but recovered any losses and traded ahead by about 2% halfway through the day. As always, due diligence is encouraged.
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