Northern Star Resources Ltd (Northern Star) and Saracen Mineral Holdings Ltd (Saracen) have entered into a binding Merger Implementation Deed (MID) under which the two companies will merge via a Saracen scheme of arrangement (Scheme).
The Scheme will create a Top-10 global major gold producer, with high-margin assets located exclusively in Tier-1 jurisdictions.
The merged Company is set to benefit from the combined skills and experience of the two leading management teams.
Under the Scheme, Northern Star Executive Chair Bill Beament will be Chair of the merged group (transitioning from Executive to Non-Executive Chair in July 2021) and Saracen Managing Director Raleigh Finlayson will be Managing Director.
Stuart Tonkin will be Chief Executive Officer and Morgan Ball will be Chief Financial Officer.
Upon completion, the Board of nine will comprise five Directors from Northern Star (including Mr Beament) and four Directors from Saracen (including Mr Finlayson).
Saracen’s Non-Executive Chair Tony Kiernan will be the Lead Independent Non-Executive Director.
Under the terms of the Scheme, each Saracen shareholder will receive 0.3763 Northern Star shares for each Saracen share held on the record date.
Upon implementation of the Scheme, Northern Star shareholders will own 64.0 per cent of the combined entity and Saracen shareholders will own the remaining 36.0 per cent.
The Saracen Board of Directors recommends that Saracen shareholders vote in favour of the Scheme and each Saracen Director intends to vote all the shares that they hold in Saracen in favour of the Scheme (in both cases, subject to the Independent Expert opining that the Scheme is in the best interests of Saracen shareholders and in the absence of a superior proposal).
The Northern Star Board endorses and supports the transaction in the absence of a superior proposal for Northern Star.
Mr Beament said that Northern Star has only ever pursued growth when it will create value for shareholders, and this merger-of-equals will create an abundance of value for both Northern Star and Saracen shareholders.
“This is significant value-creating M&A. Our position as joint venture partners at KCGM, the close proximity of the majority of the combined company’s assets and a host of other synergies makes this a unique opportunity exclusive to Saracen and Northern Star shareholders,” he said.
Mr Finlayson commented that the benefits which will flow to Saracen shareholders from this merger are significant.
“The pre-tax synergies alone are expected to be worth in the order of A$1.5 to A$2.0 billion over the next 10 years. Saracen shareholders will own 36.0 per cent of the combined group and therefore share in the significant benefits of these synergies, which is value that would not have been available to our shareholders otherwise. It is difficult to foresee anything like that reduction in our cost base outside of this merger,” Mr Finlayson said.
“This is one of the most logical and strategic M&A transactions the mining industry has seen. The savings, the synergies and the growth opportunities it will generate make the transaction extremely compelling.”
“In short, it is a unique opportunity for Saracen shareholders unlikely to be replicated via any other avenue,” he added.