By Lisa Kerner
Charlotte, N.C., March 4 - New Gold Inc. announced that it agreed to acquire Western Goldfields Inc. in a stock-and-cash plan of arrangement.
Western Goldfields shareholders will receive one New Gold common share and C$0.0001 in cash per share of Western Goldfields, the companies said.
The offer price is a 19.2% premium to the closing price of Western Goldfields shares on the Toronto Stock Exchange on March 3, based on the closing price of New Gold's common shares of C$2.30 on that same date.
Termination rights for both companies and a termination fee of C$8.8 million are included in the plan of arrangement.
New Gold and Western Goldfields expect to close the transaction at the end of May, subject to regulatory and shareholder approvals.
Once the merger is complete, existing New Gold and Western Goldfields shareholders will own approximately 58% and 42% of the combined company, respectively.
Chairman of Western Goldfields Randall Oliphant will lead the combined company as executive chairman while New Gold president and chief executive officer Robert Gallagher will be the president and CEO of the combined company.
The combined company's board of directors will include six current directors of New Gold and four current directors of Western Goldfields.
"This [business combination] 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's Gallagher said in a news release.
Gallagher said the merger is in line with New Gold's growth strategy and "vision of becoming a million ounce gold producer by 2012."
Macquarie Capital Markets Canada Ltd. is advising New Gold. Western Goldfields is being advised by BMO Capital Markets.
New Gold is a Vancouver, B.C.-based mining company.
Western Goldfields is a Toronto-based gold producer.
| Acquirer: | New Gold Inc.
|
| Target: | Western Goldfields Inc.
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| Announcement date: | March 4
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| Price per share: | One New Gold share and C$0.0001 in cash
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| Termination fee: | C$8.8 million
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| Expected closing: | End of May 2009
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| Stock price of target: | NYSE Alternext: WGW: $1.48 on March 3
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| Stock price of acquirer: | Amex: NGD: $1.65 on March 3
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