Some mergers just flow right through with the share value of the company to be acquired gapping to the purchase price and then simply holding in that area. Well, that could be considered a bit of a boring scenario as compared to the war of words that sometimes goes on as two companies jostle for positioning during negotiations to settle on a final value for the acquisition terms.
When Trelawney Mining and Exploration Inc. announced late on July 8 that it intended to make a formal offer to acquire all of the outstanding shares of Augen Gold Corp. in exchange for shares of Trelawney, the debate over the value of portfolio of properties in Augen’s possession and the compliance of Trelawney’s unsolicited offer commenced. A subsequent tussle followed with Augen advising its shareholders to take no action at first and then recommending that shareholders reject the Trelawney offer under the premise that the offer undervalues Augen.
Mid-August brought mumblings of an increased offer that was verified through press by Augen and followed in the last week of August with a new offer of $0.34 per share (or $49.3 million) for Augen, a 26% premium to the value of GLD prior to the July 8 close and $0.02 per share higher than its original offer. At that level, Augen Chairman Tim Peterson recommended shareholders accept the offer.
Trelawney will boost its Ontario holdings as Augen owns 23,685 hectares of staked and patented mining claims in the Southern Swayze Greenstone Belt, including the formerly producing Jerome Gold Mine. News hit the wire two weeks ago regarding a NI 43-101 compliant technical report on the Jerome Mine Project filed by Augen with SEDAR which is available on the Augen website at: http://augengold.ca/docs/wp-content/uploads/Technical-Report-on-a-Resource-Estimate-on-the-Jerome-Mine-Property.pdf.
What the future holds for Augen and Trelawney may be looking a bit more solid based on recent press and the mining investment community appears to embrace the newfound stability of the offer. The V.GLD share price has been somewhat volatile throughout the takeover bid, fluctuating between primarily 32 and 42 cents and is back smoothly on the climb again this last week, closing at $0.41 on 481,300 shares of volume today.
As of September 12, roughly 137 million common shares, or about 87%, of Augen Gold Corp have been validly deposited to Trelawney’s offer to acquire all of Augen shares. In return, each Augen Gold shareholder will receive 0.0862 of a common share of Trelawney for each GLD share tendered. Augen shareholders have until September 23, to tender remaining shares. Based on Augen’s current market cap, the combined company will have a market cap of more than $636 million. Shares of Trelawney closed Wednesday at $4.84, up 1.04%, on a volume of 868,300.
