Pan American Silver Completes US$1.07-billion Acquisition of Tahoe

Pan American Silver (TSX:PAAS,NASDAQ:PAAS) has solidified its position as the world’s premier silver producer after closing the US$1.07-billion acquisition of Tahoe Resources (TSX:THO,NYSE:TAHO) on Friday (February 25).

The silver miner, which has found success with its six mines in Mexico, Peru, Argentina and Bolivia, as well as gold mines in Peru and Canada, now holds all the issued and outstanding shares of Tahoe.

“The completion of the arrangement establishes the world’s premier silver mining company with an industry-leading portfolio of assets, a robust growth profile and attractive operating margins,” said Michael Steinmann, president and CEO of Pan American Silver.

“We are also now the largest publicly traded silver mining company by free float, offering silver mining investors enhanced scale and liquidity.” 

Steinmann added that Pan American had a 25-year track record of building successful partnerships with the communities around its operations in Latin America and that the company is committed in its endeavour to work with communities around its newly acquired assets.

Through the deal, Pan American acquired the troubled Escobal mine in Guatemala, where Tahoe had ongoing disputes with Guatemalan protesters over operations at the asset. At the beginning of November last year, the company said that there were no signs of concluding the dispute, which created uncertainty for the both the miner and its investors.

Pan American hopes to resolve this issue quickly and efficiently in order to begin reaping the benefits of now owning the second-largest silver mine in the world.

“It’s a wonderful acquisition on the cheap for Pan Am,” Ed Steer of Ed Steer’s Gold and Silver Digest told the Investing News Network.

“[W]hen the outstanding issues with their silver mine in Guatemala are resolved AND when the big banks, led by JPMorgan (NYSE:JPM), take their collective feet off the silver price, it will be seen as the deal of the century,” he added.

Pan American and Tahoe shareholders now own approximately 73 percent and 27 percent of Pan American, respectively. Meanwhile, Pan American and Tahoe shareholders own roughly 68 percent and 32 percent respectively of the merged company.

With the acquisition complete, Tahoe will be delisted from the Toronto Stock Exchange on Tuesday (February 26), and from the New York Stock Exchange next Monday (March 4).

As of 3:31 p.m. EST on Monday (February 25), Pan American was trading at C$18.48 in Toronto.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.