First Majestic and First Silver Announce MergFirst Majestic and First Silver Announce Merger
By The Canadian Press
06 Jun 2006 at 08:09 AM EDT
VANCOUVER (CP) -- First Majestic Resource Corp. [TSXv:FR] plans to take its First Silver Reserve Inc. [TSX:FSR] subsidiary private in a C$31 million deal to merge the two companies.
First Majestic said late Tuesday that First Silver will become a wholly owned subsidiary and then the two companies will merge into a new entity to be named First Majestic Resource Corp. or First Majestic Silver Corp.
Under the terms of the agreement, First Silver shareholders can receive either one First Majestic share for each two First Silver shares, or nearly C$2.17 in cash, which First Majestic said is the same basis as a major shareholder who recently sold about 24.7 million shares of the company.
First Majestic already owns 63% of First Silver's 38.7 million shares, so the privatization deal will cost about C$31.2 million.
The share-swap option represents a 5.43% premium over the 10-day trading average of First Silver shares, First Majestic said.
If shareholders take the cash option, half will be paid upon the merger's completion and the balance in two equal instalments over two years, with interest.
The merger is subject to a due diligence period on behalf of First Silver and receipt of regulatory and shareholder approval, First Majestic added.
The merger is expected to take place in August in early September.
The officers of the merged company are expected to be Keith Neumeyer as president and CEO, Ramon Davila as chief operating officer, Douglas Scott as chief financial officer and Jude Fawcett as corporate secretary.
First Silver Reserve owns the San Martin silver mine in Jalisco State, Mexico. First Majestic owns the La Parrilla silver mine in Durango State, Mexico.
''The combination of the two companies will bring together synergies that will result in a very efficient team of mining, development and exploration professionals that will result in one of the most dynamic pure silver producing companies in the world,'' First Majestic said in a release.
On Tuesday, First Silver shares traded at C$2.38 on the Toronto Stock Exchange, while First Majestic shares traded at C$5.12.
© The Canadian Press 2006