Agnico Eagle to buy Kirkland Lake Gold in $11bn stock deal

December 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2021 Issue

In a merger of equals which creates an industry leader with a dominant position in the Canadian gold mining industry, Agnico Eagle Mines Limited and Kirkland Lake Gold Ltd are to combine in a transaction valued at $11bn.

Under the terms of the merger agreement, Kirkland Lake shareholders will receive 0.7935 of an Agnico Eagle common share for each Kirkland Lake common share held. Upon closing, existing Agnico Eagle and Kirkland Lake shareholders will own approximately 54 and 46 percent of the combined company, which will continue under the name Agnico Eagle Mines Limited.

Furthermore, the merger will establish the new company as the Canadian gold mining industry’s highest-quality senior producer, with the lowest unit costs, highest margins, most favourable risk profile and industry-leading best practices in key areas of environmental, social and governance (ESG).

The merger also combines a robust pipeline of growth projects and exploration opportunities in existing mining camps that will drive manageable and high-return production growth over the next decade. The combined company is expected to have $2.3bn of available liquidity, a mineral reserve base of 48 million ounces of gold and an extensive pipeline of development and exploration projects to drive sustainable, low-risk growth.

“This transaction starts a new chapter in Agnico Eagle’s 64-year history and creates the leading low risk global gold company with growing production, low costs and strong ESG leadership,” said Sean Boyd, chief executive of Agnico Eagle. “The transaction creates a company with a strong platform of people, assets and financial resources to continue to build and operate a long term sustainable and self-funding business.”

“We are pleased and excited to be entering into a combination with Agnico Eagle,” said Tony Makuch, president and chief executive of Kirkland Lake Gold. “It is a unique ‘strength-on-strength’ transaction that combines the two global gold producers with the best track records for increasing per share value.

“The transaction represents a true merger of equals,” he continued. “The business of both companies will benefit from the significant financial strength of the merged company, the extensive pipeline of development and exploration projects to drive future growth, and the potential to realise significant operational and strategic synergies.”

The board of directors of both companies have unanimously approved the transaction, which is expected to close in December 2021 or in the first quarter of 2022.

TD Securities Inc., BofA Securities and Trinity Advisors Corporation are serving Agnico Eagle as financial advisers and Davies Ward Phillips & Vineberg LLP as legal adviser. BMO Capital Markets and Maxit Capital LP are serving Kirkland Lake as financial advisers, with Cassels Brock & Blackwell LLP as legal adviser.

“Kirkland Lake is an excellent cultural fit with Agnico Eagle, and we look forward to working together to further grow our business through exploration, mine development and optimisation of our high-quality asset base,” concluded Mr Boyd. “Over time, we believe that the industry will continue to evolve and consolidate and with this transaction we are well positioned to take advantage of high-quality opportunities and be a true Canadian mining champion.”

Fraser Tennant