Iamgold to buy Australian miner
Stock deal valued at $235 million Gallery Gold has Botswana mine
Iamgold Corp. plans to buy Gallery Gold Ltd., an Australian company with a working mine in Botswana and other developments elsewhere in Africa in a friendly deal worth about $235 million. Gallery shareholders are to receive one Iamgold share for each 22 Gallery shares.
Iamgold said the price is a 25 per cent premium above Friday’s closing price and 40 per cent above Gallery’s average price over the past month on the Australian Stock Exchange.
Gallery’s shareholders will own about 15 per cent of the combined company if the deal goes through as planned.
In addition to Gallery’s mine in Botswana, which produces 100,000 ounces of gold annually, the merged company would go ahead next year on a project in Tanzania,
Gallery also has several exploration programs in southern and eastern Africa, where Iamgold has all of its current gold operations.
Directors of Gallery support the Iamgold takeover, as does Lion Selection Group, which owns 18.8 per cent of Gallery, but the deal is subject to a vote by Gallery shareholders and approval by the Australian court.
Iamgold president and CEO Joe Conway said yesterday in a joint conference call that the deal is “ a great opportunity for both sets of shareholders to benefit for the long term.”
“ One of the important features ( of the transaction) that both parties wanted was certainty and the support of a major shareholder,” Conway said.
Another benefit is that there will be a full integration of the two companies’ management that will create a “ strong and dynamic team of people to move the company to the next step,” Conway said. The deal comes as the gold industry goes through a rapid consolidation, with numerous mergers and takeovers in the works.
Iamgold has recently been left at the altar twice. A proposed combination with Vancouverbased Wheaton River and a takeover by South Africa’s Gold Fields Ltd. both failed to win sufficient shareholder support in 2004. Conway said yesterday that Gallery shareholders will benefit from the premium paid for their shares, the increased operational diversification of the merged company and Iamgold’s financial strength.
Iamgold has cash and bullion worth $ 112 million ( U. S.), annual cash flow of over $75 million and no corporate debt, he said.
Gallery has $20 million in debt that will be assumed by the combined company. Gallery’s senior management is to join the combined company, which will have its head office in Toronto with a regional and technical centre in Perth.