Supreme Court approves Northern Star and Saracen mega merger

The Northern Star and Saracen share prices closed flat today following the announcement that the merger between the two companies has been approved by the WA Supreme Court.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published February 2, 2021 5:16 pm AEDT

The Northern Star Resources Ltd (ASX: NST) share price closed slightly higher this afternoon at $13.08, a 0.85% lift.

Earlier today, Northern Star announced that the Supreme Court of Western Australia approved the scheme of arrangement by which the company will acquire all of the shares of Saracen Mineral Holdings Limited (ASX: SAR).

The Saracen Mineral share price also closed relatively flat at $4.89 today on the news, up 0.58%. Saracen has a market capitalisation of $5.5 billion and 1.1 billion shares outstanding. Over the past year, the Saracen share price has gained more than 24%.

impacts on newcrest share price by merger represented by two people bringing together jigsaw pieces against gold background — Image source: Getty Images

What's next for Saracen and Northern Star?

Saracen is expected to lodge a copy of the court's orders tomorrow, Wednesday 3 February 2021, with the Australian Securities and Investments Commission (ASIC).

Following this, Saracen's shares will be suspended from trading on the ASX at the close of trading tomorrow.

As a result of the merger, Saracen share holders will receive a special dividend.

Northern Star has listed Friday 12 February 2021 as the official implementation date pertaining to the share acquisition. On Monday 15 February 2021, new Northern Star shares will commence trading on the ASX.

Some highlights from Northern Star's latest quarterly

Let's take a look at Northern Star's recently released quarterly report to see what else the company has been up to lately besides the Saracen merger.

Northern Star reported that the fourth quarter December 2020 gold sold total came in at 252,889oz. This is at the top end of the company's guidance of 226,000 to 254,000oz for the period. It was also 11% higher than the previous quarter.

Northern Star invested $63 million in growth capital and exploration during the period. Despite this growth expenditure, Northern Star further reported a December quarter free underlying cashflow of $93 million.

The company credits its strong production and cashflow for the cut to corporate debt that also occurred during the time period. Northern Star cut its corporate debt by $125 million to $375 million.

As of 31 December 2020, Northern Star's cash, bullion and investments total stood at $372 million.

The Northern Star share price has dipped nearly 20% over the last six-month period.

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