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Market: TSX NYSE
Sector: Gold Mining
EPIC: ELD
Latest Price: 11.12  (1.14% Ascending)
52-week High: 21.50
52-week Low: 10.38
Market Cap: 7,910.50M
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Eldorado Gold
www.eldoradogold.com

Eldorado Gold Corporation is a gold mining company actively growing businesses in Brazil, China, Turkey, Greece, and surrounding regions. Eldorado Gold is one of the lowest cost pure gold producers, and anticipates production of 700,000 ounces of gold per annum by 2013.

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Eldorado to buy European Goldfields for $2.5 billion

19th Dec 2011, 8:58 am by Joyanta Acharjee
Eldorado to buy European Goldfields for $2.5 billion

Eldorado Gold (TSE:ELD)(NYSE:EGO) agreed over the weekend to buy European Goldfields (TSE:EGU)(LON:EGU) in a $2.5 billion deal.

European Goldfields shareholders will be offered 0.85 of an Eldorado share and $0.0001 in cash for each European Goldfields share they own, under the deal.

The exchange ratio represents a value of $13.08 per share, based on the closing stock price of Eldorado on the TSX on Friday December 16.

The deal represents a 48.4 percent premium based on the closing share price on December 5, the last trading day before European Goldfields said it had received preliminary approaches from third parties.

The board of European "unanimously" recommended shareholders vote in favour of the proposed deal.

European Goldfields has long been seen as a potential target since it received a Greek mining permit that could turn it into a mid-tier miner and one of Europe's largest primary gold producers.

The deal also continues a consolidation trend as smaller companies merge to take advantage of high gold prices and to help finance new development projects around the globe.

European Goldfields' chairman and president, Martyn Konig, said: "Today’s transaction offers excellent value to shareholders through an immediate premium, reduced execution risk, and future upside through participation in Eldorado, a leading gold growth story with a world-class asset portfolio and a compelling dividend policy.

"In addition, this is good news for Greece as Eldorado has the experience, local operating knowledge and track record to develop our assets in Greece efficiently and safely, supporting employment and contributing to the economic recovery of the country.

"After reviewing a number of proposals, with maximising shareholder value as a primary objective, the Board unanimously recommends shareholders vote in favour of the proposed transaction."

European Goldfields is a developer-producer with three significant gold and base metal deposits in Greece and Romania.

Eldorado is a gold producer and developer with operations in Brazil, China, Greece, and Turkey and surrounding regions.

The proposed deal between Eldorado and European Goldfields will result in a substantial increase in reserves, with European Goldfields contributing its 9.2 million gold ounces to the combined company, creating a position as one of the lowest cost, highest growth global gold producers, with increased liquidity.

It will also result in combined current gold production of 650,000 ounces, growing to over 1.5 million ounces by 2015 through project pipeline and expansion opportunities, as well as providing increased leverage to record near term gold prices, with no hedge program and exposure to Eldorado’s gold price-linked dividend policy.

Eldorado president and CEO, Mr. Paul N. Wright, added: "Integration of European Goldfields’ business with our own will provide Eldorado with the dominant gold mining business in the Aegean Region and the combined business will constitute the leading low cost, high growth intermediate gold producer globally.

"We are particularly pleased to be partnering with Aktor SA, Greece’s largest construction company, to help ensure effective, safe and timely development of our operations in Greece."

European Goldfields also said it will adjourn a shareholder meeting that was due Thursday that would have voted on a financing deal with Qatar's sovereign wealth fund.

In October, European Goldfields signed a deal with Qatar Holding LLC to help finance its Skouries and Olympias gold projects in Greece.

Under this agreement, the company obtained a US$600 million seven-year loan and issued the Middle Eastern fund 40.4 million warrants for shares in the company with a strike price of $9.08.

Qatar Holding also bought 18.2 million European Goldfields shares from Aktor Construction International, and Dimitrios Koutras for $10 per share, and signed a call option agreement for an additional 9.4 million shares at $13 per share. Aktor holds a 12.2 percent stake in European Goldfields, while Koutras holds roughly three per cent.

Following the completion of the Eldorado deal, current Eldorado stockholders will own around 78 percent of the combined company, while shareholders of European Goldfields will hold around 22 percent, on a fully diluted basis.

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