Eldorado Gold wins investor support to buy copper-focused Foran

Eldorado Gold (TSE: ELD) C$3.8 billion ($2.7 billion) bid to buy Foran Mining (TSE: FOM) won shareholder support, advancing plans to create a larger Canadian gold-and-copper miner after the company overcame an activist campaign that had cast doubt on the deal’s prospects.

Almost 85% of Eldorado shareholders who voted at a meeting on Tuesday supported the acquisition, exceeding the 50% threshold required for the transaction to proceed. Foran investors backed the takeover at a separate meeting earlier in the day.

Eldorado, which owns gold projects in Canada and Europe, launched a cash-and-stock offer in February to acquire all of Foran’s shares. The purchase — unanimously backed by both boards — increases Eldorado’s exposure to copper, a metal increasingly prized by miners as electrification drives demand and the cost of developing new deposits climbs.

Conflicting guidance from proxy advisers ahead of the vote had clouded the outcome. Last week, Glass Lewis & Co. recommended Eldorado shareholders oppose the transaction, citing concerns  the company overvalued the target. By contrast, Institutional Shareholder Services urged investors in both Eldorado and Foran to support the takeover.

Mixed signals from Eldorado investors also raised questions about support for the acquisition, including vocal disapproval from L1 Capital, the company’s third-largest shareholder. The Melbourne-based hedge fund wrote to Eldorado’s board last month requesting the miner terminate the takeover proposal. L1 Co-Chief Investment Officer Raphael Lamm called it “one of the most value-destructive deals we have seen in decades of investing in the mid-cap mining sector.”

Two major pension funds, the California State Teachers’ Retirement System and the California Public Employees’ Retirement System, disclosed different voting intentions ahead of Tuesday’s meeting, with the former backing the transaction and the latter opposing it.

Increased scrutiny of valuation and strategy comes at a time of extreme volatility in metals and broader markets. Copper and gold both surged to all-time highs in January in some of the sharpest rallies on record, though prices have since dropped more than 10% amid the conflict in the Middle East that began in late February.

(By Sybilla Gross)