Tahoe makes $1.3B bid for Rio Alto
VANCOUVER • Rio Alto Mining Ltd. shares jumped 11.3% Monday after it agreed to a friendly takeover by Tahoe Resources Inc., which would become a mid-sized silver and gold producer focused on Latin America.
Rio Alto’s stock gained 37¢ to close at $3.65 on the Toronto Stock Exchange while Tahoe shares dropped $1.64, or 9.3%, to $16.
Tahoe’s friendly offer valued Rio Alto at about $1.3 billion, based on Friday stock prices for the two companies.
Under the current proposal, Rio Alto shareholders will receive 0.227 of a Tahoe Resources share and one-tenth of a cent cash per share, making the offer worth about $4 per share based on Tahoe Resources’s share price before the agreement was announced.
Rio Alto shareholders will own about 35% of the combined company.
If a competing offer emerges, Tahoe Resources will have an opportunity to match its rival’s bid and would receive a $57.6-million termination fee under certain circumstances.
The combined company would produce gold in Peru from Rio Alto’s established La Arena mine and the Shahuindo gold project that’s scheduled to begin production next year.
Tahoe Resources’s principle holding is the Escobal silver mine in Guatemala, which has been in commercial production since January 2014.
The boards of both companies are supporting the proposed deal, which requires approvals from shareholders of both companies.
Goldcorp Inc. has about 39% of Tahoe’s shares and has agreed to support the deal.
The companies anticipate the deal will close by early April.