Gold Road Resources Ltd (ASX: GOR) shares are charging higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock entered an intraday trading halt on Friday, swapping hands for $2.97. Gold Road requested the pause in trading following media speculation "regarding a potential change of control transaction".
The company resumed trading today after Gold Road released the details of the speculated transaction. And investors are responding enthusiastically, with Gold Road shares up 9.8% at $3.26 apiece in early morning trade.
For some context, the ASX 200 is down 0.3% at this same time.
Here's what we just learned.
Gold Road shares lift off on acquisition news
ASX investors are bidding up Gold Road shares after the miner reported that it has entered into an agreement with Gruyere Holdings (a wholly owned subsidiary of South African-based global gold mining giant Gold Fields Ltd (NYSE: GFI)) to acquire 100% of the issued and outstanding share capital in Gold Road by way of a scheme of arrangement.
Under the proposal, Gold Road stockholders will receive $2.52 per Gold Road share (less any special dividend paid prior to implementation of the scheme). Stockholders will also get a variable cash consideration equal to the full value of their proportionate holding in Northern Star Resources Ltd (ASX: NST).
That value will be calculated when the scheme becomes effective. But management noted that as of last Friday, 2 May, the total cash consideration equates to $3.40 per share.
This values Gold Road's equity at approximately $3.7 billion.
Management said they intend to declare a fully franked special dividend of 35 cents per share should the scheme become effective.
In late March, Gold Road rejected a takeover offer from Gold Fields valued at $3.05 per share. At the time the board said they had "unanimously formed the view that the offer materially under values Gold Road and is highly opportunistic in nature".
But with the new offer sweetening the deal by 12%, Gold Road's board said they now unanimously recommend shareholders vote in favour of the scheme, in the absence of a superior proposal.
What did management say?
Commenting on the takeover offer sending Gold Road rocketing today, chairman Tim Netscher said, "The board has been focused at all times on ensuring that we deliver value and act in the best interests of our shareholders."
Netscher added:
The Gold Road directors consider that the value offered by the all-cash Scheme Consideration delivers compelling value for Gold Road shareholders compared to what may otherwise be available if Gold Road continued to operate as a standalone entity.
The variable cash consideration provides ongoing exposure to the supportive gold price environment up until the effective date of the scheme through Gold Road's shareholding in Northern Star. Additionally, the payment of a special dividend allows Gold Road to realise the full value of the company's franking account balance for eligible shareholders.
Gold Road CEO Duncan Gibbs noted, "This offer price represents a material premium to the undisturbed share price prior to the initial Gold Fields' proposal and a material premium to longer term trading levels."
With today's intraday lift factored in, Gold Road shares are up 106% since this time last year, not including dividends.
