Nevertheless, the broker said that following the offer, it reduced its price target to CA$5.25 from CA$7.75 and lowered its rating to hold back from buying.
Although it was below the broker’s earlier target price, Stifel said he saw the merits of the deal and believed the combination would be about to be re-evaluated.
Both companies have posted consecutive year-over-year GEO (gold equivalent ounce) revenue growth since inception, with the combined company posting an immediate implied GEO rate of 115-120 koz and an estimated average growth of 5 years at more than 140 koz GEO. wrote the analysts.
With an equity component to the deal, Maverix investors should be able to participate in the company’s proforma revaluation, analysts noted.
There are no hurdles expected at the closing of the offering. “While there is always the potential for another bidder to emerge, we currently believe there is a low likelihood of a competing bid,” the analysts said.
Stifel pointed out that major shareholders, as well as Maverix officers and directors, who collectively control about 57% of Maverix stock, supported the deal.
The broker’s comments came as the company released third-quarter results that were broadly in line with expectations.
The company reiterated the adjusted guidance for 2022 of 28-31,000 GEO, and Stifel said the portfolio is on track to reach the upper end of the guidance range.
Shares of Maverix Metals were trading down 0.78% at C$5.21.
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