Royal Gold (RGLD) has announced that it’s acquiring Canada’s Sandstorm Gold (SAND) for $3.50 billion.
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Under terms of the all-stock deal, Colorado-based Royal Gold will issue 0.0625 shares for each Sandstorm share that it doesn’t already own. Royal Gold said that upon completion of the transaction, its shareholders will own 77% and Sandstorm shareholders will own 23% of the newly combined company.
The deal represents a 21% premium to the 20-day average share price of Sandstorm Gold, said the companies in a news release. Sandstorm Gold is based in Vancouver, British Columbia. The deal is expected to close in the fourth quarter of this year.
Horizon Copper
At the same time, Royal Gold will acquire Canadian junior miner Horizon Copper (TSE:HCU) in an all-cash transaction valued at $196 million. The combined entities will create the world’s most diversified, large-scale precious metals royalty company, with 393 royalties, including 80 cash-flowing assets.
The revenue mix of the combined companies is expected to be 87% precious metals, with 75% from gold, said Royal Gold in a news release. The acquisition comes with the price of gold not far from its all-time high of just over $3,500 per ounce. Gold is currently trading at $3,326.40 an ounce.
The stock of Royal Gold is down 9% on news of the acquisitions.
Is RGLD Stock a Buy?
The stock of Royal Gold has a consensus Moderate Buy rating among six Wall Street analysts. That rating is based on three Buy, two Hold, and one Sell recommendations issued in the last three months. The average RGLD price target of $201 implies 21.97% upside from current levels.
