Why Alamos Gold Stock Just Crashed 16%
This morning, Toronto-based goldminer Alamos Gold (NYSE: AGI) announced it will pay nearly three-quarters of a billion dollars to acquire a rival half its size -- Quebec-headquartered Richmont Mines (NYSE: RIC). Alamos Gold stock plummeted more than 16% in response, and is still down 15.7% as of 1:45 p.m. EDT.
Alamos is shelling out 905 million Canadian dollars ($747 million U.S.) to acquire Richmont, but not in cash. Instead, Alamos will trade 1.385 of its own shares for each share of Richmont outstanding. The deal, says Alamos, worked out to a "22% premium to Richmont's closing price and a 32% premium based on both companies' 20-day volume-weighted average prices, both as [of] September 8, 2017" -- about CA$14.20 per Richmont share.
Alamos justified the premium by saying it will acquire "a High-Quality, Free Cash Flowing Mine in a World Class Jurisdiction," and cement its own position as "a Leading Intermediate Gold Producer," producing over 500,000 ounces of gold ore annually at a low cost.
Source: Fool.com
