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

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: