Yamana’s Offer For Meridian Gold Appears Inadequate (MDG, AUY, GLD)

By Douglas A. McIntyre Published Aug 20, 8:27AM EDT

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Meridian Gold Inc. (NYSE:MDG) has announced that its Board of Directors unanimously recommends that shareholders reject the amended unsolicited offer by Yamana Gold Inc. (NYSE:AUY) and not tender any of their shares after it determined that the amended offer still fails to provide full value for Meridian Gold shares.

The company officer quotes signal an inadequate offer and that the company is continuing to execut on its own. It also has received written opinions from each of its financial advisors, BMO Capital Markets and Goldman Sachs, that the consideration offered under the amended Yamana offer was inadequate.

Meridian Gold’s Board of Directors also reviewed its reasons for rejecting the original offer: the C$0.85 increase in the cash portion of the consideration represents only a 2.9% increase in the total consideration as of the announcement date of the amended offer; the cash has increased only from 10.9% to 13.4% of the total consideration as of the announcement date of the amended offer, and the offer still consists overwhelmingly of Yamana shares; if the Meridian shares had tracked the rise in the Philadelphia Gold & Silver Index (XAU) since Yamana’s original June 27 announcement, the amended offer would represent a one day premium of only 8.3%.

Meridian Gold is actually toward the lower-end of its 52-week trading range: Its Canadian ADR’s closed at $24.12 Friday in US trading and its range over the last year is $21.58 to $32.53. It also has a $2.4 Billion market cap and trades more than 1 million shares per day on average. The streetTRACKS Gold Shares (GLD) ETF that tracks gold ounces at 1/10 the price minus management fees, closed at $64.94 on Friday, and its 52-week trading range is $55.55 to $68.73.

Jon C. Ogg
August 20, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.