Royal Gold Corp. said Friday it agreed to buy International Royalty Corp. for 749 million Canadian dollars ($706.9 million) in cash and stock, creating a company with expanded royalties in gold and other precious metals.
The agreement comes nearly two weeks after Franco-Nevada Corp. of Toronto submitted an unsolicited cash offer of 6.75 Canadian dollars ($6.42) per share for IRC.
All three companies earn revenue from royalties they hold at mines around the world. IRC's sought-after royalties include Barrick Gold Corp.'s Pascua-Lama gold, silver and copper mine under development in Chile.
IRC's management and board of directors unanimously backed the Royal Gold bid, saying it is superior to prior offers.
If the Royal Gold offer is finalized, the combined company will have nearly 200 royalty interests, primarily in Canada, Chile and Australia. About 80 percent of total revenue will come from precious metals royalties when Pascua-Lama is commissioned in 2013.
The companies had combined revenue of $113 million in the fiscal year ended in September.
Royal Gold, headquartered in Denver, has offered 7.45 Canadian dollars ($7.03) in cash or 0.1385 common shares for each common share of IRC. Royal Gold set a maximum of $350 million in cash and a maximum of 7.75 million shares.
If the maximum share election is realized, the offer consists of 0.0771 shares of Royal Gold and $3.12 in cash for each share of IRC.
Royal Gold says the offer represents a premium of 70 percent over IRC's 20-day volume-weighted average trading price through Dec. 4 on the Toronto Stock Exchange.
The transaction which is subject to the approval of 66.75 percent of IRC shareholders.
Shares of IRC rose 31 cents, or 4.5 percent, to $7.14 in midday trading while Royal Gold rose 47 cents to $47.47. IRC shares earlier hit a new year high of $7.31, eclipsing a prior peak of $7.03.