New Gold to acquire Western Goldfields in all share transaction
The transaction values Western Goldfields at a 19% premium to the closing price on 3 March. Post merger, New Gold shareholders will own 58% of the enlarged company.
Robert Gallagher, President and Chief Executive Officer of New Gold said:
"We are delighted with the announcement of the business combination with Western Goldfields. This is in line with our growth strategy and vision of becoming a million ounce gold producer by 2012. This represents significant value for New Gold and Western Goldfields shareholders with greater leverage to gold in a larger intermediate gold mining company, diversified production in mining-friendly jurisdictions, and strengthened financial position."
New Gold listed numerous benefits for the transaction, but the primary driving force behind the deal appears to be an ambition to move New Gold firmly into the mid-tier gold producer league. The combined entity is forecast to produce 335,000 ounces of gold this year, rising to 400,000 ounces in 2010.
Post merger, New Gold will have approximately C$177 million in cash, $77 million of Asset Backed Commercial Paper and $275 million in debt.
Quick facts: New Gold Inc.
Price: 2.47 CAD
Market Cap: $1.67 billion
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