Sino Gold (ASX:SGX) in Talks to Merge with Eldorado (TSE:ELD)
If the deal proceeds it will create a merged company with a market capitalisation of about $US6 billion, similar to Australia's second largest gold producer Lihir Gold Ltd (ASX:LGL).
The offer represents a 21% premium to Sino Gold's closing share price before its trading halt, based on the closing price of Eldorado on Toronto Stock Exchange on Tuesday. But analysts expected a bid premium of 30% and above.
Sino Gold Mining chief Jake Klein has backed the Eldorado takeover bid for his company, saying talks have gone on for four years. Eldorado has already owned 19.8 per cent stake in Sino Gold.
He said Eldorado's operations in Greece, Turkey and South America could help Sino Gold's "China Plus One" project to expand its operations outside of China and become an intermediate world producer of gold.
Under the proposed deal SinoGold shareholders will be able to hold their Eldorado shares on the Australian stock exchange or the Toronto Stock Exchange.
Sino Gold Limited
Eldorado Gold Corporation