Disappointed with the dealVery disappointed. I was willing to wait 3-4 years for $3-$4, although believe it could have happened sooner, especially if they managed to pull off another deal or even two, which they probably could have done at favourable prices, in the next 12 – 18 months.
When I bought SST, I looked at SLW, but I purposefully chose SST and avoided SLW.
Still, this is not a cash deal, but a share deal, 0.185 SLW for 1 SST. The same silver price and demand conditions (increasing) will exist to increase the price SLW as SST. I don’t think it will be at the same leverage for SLW, so upside is less. If the risk is less, I could live with this, but wonder if we are trading lower potential return for no less risk.
I will hang in there for now, but will be looking at whether to stick with SLW or move onto other plays I have been watching.
I looked for how tightly bound we are to this deal: “…definitive agreement entered into in connection with the transaction includes a commitment by Silverstone not to solicit alternative transactions to the proposed transaction. If the acquisition agreement is terminated in certain circumstances, Silverstone has agreed to pay Silver Wheaton a termination fee of C$6 million…Silver Wheaton has the right to match competing offers made to Silverstone.”
So, they can’t go looking for other deals, but if another happens by, they can accept it with a break fee of $6mm, which is not a huge amount. SLW always has the right to match competing offers, which probably lowers the chance of someone else making one. What are the chances of another royalty company offering more? I can’t see a producer stepping in, unless they want the exploration properties and try to sell off the royalty portions separately. Who else might bid for SST?
HC