A gold take-under

Today, Northern Star Resources (NST.ASX) announced its wish to takeover Saracen Minerals (SAR.ASX).

Why don’t they call it a takeover rather than a merger?

Well, mainly because its “friendly”, hence using a “scheme of arrangement” encourages civil co-operation and it increases the likelihood of the deal completing but it does remove any possible price tension.

Anyway, putting spin to one side,

No premium was paid over the previous day’s closing price and Saracen’s board is recommending the acceptance of “nil premium bid”.

Yesterday, NST closed at $13.82. It is paying 0.3763 of its shares for 1 SAR share. This equals $5.20 per SAR share. Saracen’s closing price yesterday was $5.22.

This resembles past comments I have made suggesting that we can expect more ‘take-unders’ in terms of M&A prices paid.

Although this friendly and perhaps submissive path makes me wonder if Saracen think the business was/is fully valued?

Today’s price action in the rest of the sector is flat. In other words, ASX listed gold stocks are not being dragged higher with any M&A exuberance.

Perhaps last weeks note (link below) may add a little more ‘colour’ to the ASX gold market.

https://robzdravevski.com/2020/09/28/you-wont-lose-your-job-hedging-at-these-levels/

October 6, 2020
by Rob Zdravevski
rob@karriasset.com.au