MAG Silver Corp. (MAG:TSX; MAG:NYSE American) agreed to be acquired by Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) for a combination of cash and stock, reported Joe Reagor, ROTH Capital Partners managing director and senior research analyst, in a May 12 research note. On the news, ROTH raised its target price on MAG to $18 per share from $16 and maintained its Neutral rating.
ROTH based its new target on the current value of the acquisition, about $18.30 per MAG share, prorated, as estimated by the investment bank, based on Pan American's current $23.33 share price, Reagor wrote.
According to the deal terms, MAG shareholders are to receive a prorated share of $500 million in cash and about 60 million (60M) shares of Pan American Silver.
JV Partner Could Jump In
ROTH believes the transaction likely will receive all of the requisite approvals and close later this year, Reagor wrote.
However, he pointed out, MAG's joint venture (JV) partner Fresnillo Plc (FNLPF:OTCMKTS; FRES:LSE) could make a competitive offer for MAG though so far it has not shown signs it will. Rather, Fresnillo has expressed its approval of the sale to Pan American and hosted the acquirer for a site visit in Mexico at Juanicipio, Fresnillo and MAG's JV project.
More Stock Details
Reagor reported that currently MAG Silver has 103.45M outstanding shares, a market cap of $1.6 billion and a 52-week range of $11.58–17.99 per share.
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