Tahoe Resources To Acquire Lake Shore Gold In C$945 Mln Deal

(RTTNews) - Tahoe Resources Inc. (TAHO, THO.TO) and Lake Shore Gold Corp. (LSG.TO) announced that they have entered into a definitive agreement whereby Tahoe will acquire all of the issued and outstanding shares of Lake Shore Gold. The implied equity value of the deal is equal to C$945 million.

Under the terms of the Arrangement Agreement, all of the Lake Shore Gold issued and outstanding common shares will be exchanged on the basis of 0.1467 of a Tahoe common share per each Lake Shore Gold common share.

The Arrangement Agreement has been unanimously approved by the Boards of Directors of Tahoe and Lake Shore Gold, and each board recommends that their respective shareholders vote in favor of the Transaction.

Upon completion of the Transaction, existing Tahoe and Lake Shore Gold shareholders will own approximately 74% and 26% of the pro forma company, respectively, on a fully-diluted in-the-money basis.

The Exchange Ratio implies a consideration of C$1.71 per Lake Shore Gold common share, based on the closing price of Tahoe common shares on the Toronto Stock Exchange (TSX) on February 5, 2016, representing a 14.8% premium to the closing price of Lake Shore Gold on February 5, 2016 and a 28.6% premium to the closing share of Lake Shore Gold on February 4, 2016.

Based on each company's 20-day volume weighted average price on the TSX, the Exchange Ratio implies a premium of 25.7% and 30.4% to Lake Shore Gold common shares for the periods ending February 5, 2016 and February 4, 2016, respectively. The implied equity value is equal to C$945 million.

Accordingly, following completion of the Transaction, Tahoe intends to continue its dividend of US$0.02 cents per share per month.

The Arrangement Agreement includes customary provisions including non-solicitation provisions, a right to match any superior proposal and a C$37.8 million termination fee payable to Tahoe under certain circumstances. A C$20.0 million termination fee is payable to Lake Shore Gold under certain circumstances.

It is anticipated that both shareholder meetings and closing of the Transaction will take place in early April 2016.