Pan American to buy Tahoe Resources
Pan American Silver Corp. (PAAS) announced today that it has agreed to buy Tahoe Resources (TAHO) in a $1.07 billion cash and stock deal. Pan American will offer $3.4 in cash or 0.2403 Pan American shares for each Tahoe share. PAAS will, however, offer a maximum cash consideration of $275 million and a maximum 56 million issued shares, totaling $1.067 billion. This consideration represents a 34.9% premium to Tahoe’s share volume over the previous 20 days. After the close of the transaction, PAAS will own ~68% while TAHO will own 32% of the combined company.
Tahoe’s Guatemalan struggles
Tahoe Resources has been battling the Guatemalan government since last year over restarting one of its major mines, Escobal. The conflict involves the company’s operations with Indigenous groups. Before the announcement of the transaction, TAHO’s stock was down ~52% year-to-date along with a slide of 49.2% in 2017.
At 12:20 PM ET, the stock was trading up 45% while Pan American slid 14%. Pan American CEO Michael Steinmann mentioned on the conference call that the combined entity would have the largest silver (SLV) reserves globally. He also mentioned in the press release that PAAS has built successful partnerships with communities around the world, and, “We are looking forward to applying this experience at Escobal, and working with the local communities towards concluding the consultation process and gaining their support to enable the restart of the mine.” Restarting this mine could turn TAHO’s fortunes around and make it accretive for PAAS.