NYSE-listed Pan American Silver has agreed to acquire MAG Silver in a cash-and-stock deal valued at about $2.1-billion, the companies said on Sunday.

The acquisition will give Pan American a 44% interest in the Juanicipio silver mine in Zacatecas, Mexico. The remaining 56% of the high-grade, low-cost operation is held by Fresnillo, which operates the mine.

“Our acquisition of MAG brings into Pan American’s portfolio one of the best silver mines in the world,” said Pan American president and CEO Michael Steinmann. “Juanicipio is a large-scale, high-grade, low-cost silver mine that will meaningfully increase Pan American’s exposure to high margin silver ounces.”

“This strategic acquisition further solidifies Pan American as a leading Americas-focused silver producer. We would like to thank the Fresnillo and the Juanicipio management teams for the constructive interactions and impressive site visit," he added.

Under the terms of the agreement, MAG shareholders would receive $20.54 a share, comprising $500-million in cash and 0.755 Pan American shares for each MAG share. The offer represents a premium of about 21% to MAG’s closing price and 27% to its 20-day volume weighted average price as of May 9.

MAG shareholders will own about 14% of Pan American on a fully diluted basis following the deal’s completion.

“This transaction represents a compelling opportunity for our shareholders, providing an immediate premium and meaningful exposure to Pan American’s world-class assets and proven growth strategy,” said MAG CEO George Paspalas.

“Through the acquisition of our interest by Pan American – a respected leader in the global precious metals industry – our shareholders will participate in an exciting future defined by operational excellence, substantial exploration potential, and strong financial stewardship with significant portfolio exposure.”

The Juanicipio mine is expected to produce between 14.7-million and 16.7-million ounces of silver in 2025, with Pan American’s share forecast between 6.5-million and 7.3-million ounces. The deal will also add 58-million ounces to Pan American’s silver reserves.

Pan American expects Juanicipio to contribute about $200-million in free cash flow next year on a 100% basis, or $98-million based on its pro forma 44% share.

The transaction, structured as a plan of arrangement, does not require approval under the Investment Canada Act or by Pan American shareholders. MAG shareholders who are Canadian residents will be eligible for an elective tax rollover if they receive Pan American shares.