Tahoe Resources Inc (NYSE: TAHO) is making a strong run for the top early on in the trading session today after the company announced that it would be acquired. Of course, the acquisition comes at a strong premium, exciting investors and sending the stock running for the top. Today, we’ll talk about the acquisition, what we’re seeing from TAHO as a result, and what we’ll be watching for ahead.
TAHO To Be Acquired
As mentioned above, Tahoe Resources is having a great day in the market today after announcing that it will be acquired. The company entered a definitive acquisition agreement with Pan American Silver. Under the terms of the agreement, Pan American will acquire all outstanding shares of TAHO, creating one of the world’s largest silver mining companies.
In the release, the company said that current holders of TAHO shares may elect to receive common shares of Pan American and/or cash in exchange for their shares of Tahoe. There will also be a contingent payment in common shares offered. The payment is contingent on the restart of the Escobal mine in Guatemala. The total value of the acquisition, including all considerations, represents a premium of 62.8% to the company’s VWAP for the 20-day period ending on November 13, 2018, coming to a price of $4.10 per share.
In a statement, Kevin McArthur, Executive Chair at TAHO, had the following to offer:
This transaction allows our shareholders to participate in the creation of the world’s premier silver company with the contribution of the world-class Escobal mine to Pan American’s existing asset base. In addition to the upfront premium, we will continue to participate in the upside inherent in a restart of Escobal through the CVRs. Pan American’s excellent track record of developing mines and fostering strong, mutually beneficial relationships with local stakeholders gives us confidence that the combined company will be best positioned to maximize value for shareholders.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of Tahoe, the news proved to be overwhelmingly positive. Not only will the company be acquired, the acquisition is going to come at a strong premium, immediately returning value to shareholders. So, it comeas as no surprise to see that excited investors are pushing the stock on a run for the top. At the moment (9:48), TAHO is trading at $3.20 per share after a gain of $1.01 per share or 45.79% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TAHO. In particular, we’re interested in following the transaction that was announced today. While the agreement is a definitive one, it’s important to remember that the transaction isn’t closed until it’s closed. In this particular case, the transaction is still subject to customary closing conditions as well as regulatory approval. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!