Gold Royalties (NYSE-AM: GROY) failed to acquire Elemental Royalties (TSXV: ELE) as its all-share hostile takeover bid expired unsuccessfully on May 12, bringing an end to a saga that began in October.
Less than 5% of its shares were tendered to the bid, Elemental said, adding that Gold Royalty had failed to meet the statutory minimum tender condition of more than 50%.
“This hostile bid has been an unfortunate and unnecessary drain on Elemental management’s time and resources,” Elemental’s CEO, Frederick Bell said in a press release.
“Elemental shareholders have again overwhelmingly chosen to reject the hostile bid, which was never a compelling proposition and currently represents a material discount to Elemental shareholders rather than the premium announced by Gold Royalty,” he added.
On Dec. 20, Gold Royalties said it was taking its offer to acquire Elemental directly to the company’s shareholders, after its two previous approaches to the junior — the first on Oct. 21 and the second on Dec. 15 — failed to engage Elemental’s board of directors.
Elemental said that the offer — 0.27 common shares of Gold Royalty for every one share of Elemental Royalties — was not in the best interests of the company and repeatedly recommended that shareholders reject the bid in the last few months.
The company told The Northern Miner that the final value of the bid was a discount of approximately 29% to the value of Elemental’s shares, based on May 12’s closing prices of $2.78 for Gold Royalty and $1.37 for Elemental, and a Canadian dollar exchange rate of $0.77.
“While we strongly believe in the merits of a combination with Elemental, we were ultimately unable to obtain the engagement and accord required to reach a board-supported, mutually-beneficial transaction,” David Garofalo, Gold Royalty CEO said in a press release.
The CEO, however, said that the company won’t waiver from its “pursuit of value-enhancing acquisitions.”
Ever since going public in March 2021 Gold Royalty has been an active acquiror, amassing a portfolio of more than 190 royalties through the acquisition of royalty companies including Ely Gold Royalties, Abitibi Royalties, and Golden Valley Mines and Royalties.