Fresnillo sells majority of MAG Silver stake as Pan American merger proceeds
London-listed Fresnillo has offloaded the majority of its stake in MAG Silver following Pan American Silver’s agreement to acquire the Canadian miner, saying the resulting dilution of its shareholding no longer aligned with its strategic objectives.
Under the terms of the proposed transaction, Fresnillo’s stake of more than 9% in MAG Silver would convert into less than 1% of Pan American shares. Fresnillo said on Friday that the outcome did not meet its investment criteria nor serve the interests of its shareholders.
“Fresnillo originally acquired its stake in MAG Silver as a strategic investment in a single-asset company to support the strong partnership at Juanicipio, one of the world's premier silver mines where Fresnillo is the operator and majority owner,” the company said in a statement.
The sale did not reflect any change in Fresnillo’s commitment to the Juanicipio mine in Mexico, which it continued to describe as a core asset delivering strong operational and financial results.
Fresnillo said it would welcome the opportunity to collaborate with Pan American if the deal completed, noting that all governance and legal terms of the Juanicipio joint venture remained unchanged. “The sale of its MAG Silver shares reflects a disciplined approach to the company's investment strategy, focusing on its core objectives,” it said.
Proceeds from the share sale would be deployed according to Fresnillo’s capital priorities, including funding its development pipeline and strengthening its balance sheet.
NYSE-listed Pan American Silver on Sunday announced an agreement to MAG Silver in a cash-and-stock deal valued at about $2.1-billion. MAG shareholders would receive $20.54 a share, comprising $500-million in cash and 0.755 Pan American shares for each MAG share.
MAG shareholders would own about 14% of Pan American on a fully diluted basis following the deal’s completion.
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