First Quantum Minerals Ltd. (FM.TO, FQM.L) and Scandinavian Minerals Ltd (SGL.TO, VV3M.F) on Monday in a joint statement reveled that they have inked a definitive agreement pursuant to which a wholly owned subsidiary of First Quantum will acquire all of the outstanding common shares of Scandinavian Minerals in a cash and stock deal valued at approximately C$281 Million. The proposed transaction is expected to close in the second quarter of 2008, shortly after receipt of shareholder and court approvals.
According to the agreement, First Quantum by way of a court-approved plan of arrangement will acquire Scandinavian Minerals for C$9.00 in cash plus 0.01 common shares of First Quantum for each common share of Scandinavian Minerals. First Quantum will finance the acquisition through a combination of cash-on-hand and access to existing credit facilities. The transaction is not contingent on any financing condition.
The implied value of the purchase price is C$9.89 per Scandinavian Minerals share based on the closing price of First Quantum shares on the Toronto Stock Exchange of C$89.36 on April 18, 2008. This represent a 41.3% premium to the closing price of Scandinavian Minerals shares on the Toronto Stock Exchange of C$7.00 on April 18, 2008 and a 53.8% premium to the volume-weighted average trading price of the Scandinavian Minerals shares on the Toronto Stock Exchange of C$6.43 for the 20 trading days ended April 18, 2008.
Besides, the agreement permits Scandinavian Minerals, in certain circumstances, to terminate the arrangement and accept an unsolicited superior proposal, subject to fulfilling certain conditions. Scandinavian Minerals has agreed to pay First Quantum a break fee of US$ 8 million in such circumstances and certain other limited circumstances if the transaction is not completed.
The Board of Directors of Scandinavian Minerals has unanimously approved the transaction and recommended the Scandinavian shareholders to vote in favor of the transaction. In addition, the directors and senior officers of Scandinavian Minerals have entered into voting agreements with First Quantum to commit their account of 13.6% Scandinavian Minerals shares in favor of the transaction.
FM.TO is currently trading at C$88.74, down C$0.62 or 0.69%, on a volume of 79,352 shares on the Toronto stock exchange.
FQM.L is currently trading at 4,460.00 pence, up 22.00 pence or 0.50%, on a volume of 911 shares on the LSE.
SGL.TO is currently trading at $9.76, up $2.76 or 39.43%, on a volume of 0.98 million shares on the Toronto stock exchange.
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