Bloomberg News

Shandong Gold Said to Make $785 Million Offer to Acquire Jaguar

November 17, 2011

Nov. 17 (Bloomberg) -- Shandong Gold Group Co., parent of China’s second-largest gold producer by market value, made a $785 million offer to buy Jaguar Mining Inc., two people familiar with the deal said.

Shandong bid $9.30 for each Jaguar share, said the people, who asked not to be identified because the information is confidential. That’s 73 percent more than Jaguar’s closing price of $5.39 on Nov. 15 in New York. The company has 84.4 million shares issued, according to data compiled by Bloomberg.

Jaguar received “proposals over the past few weeks” and has decided to explore alternatives, the Concord, New Hampshire- based company said yesterday in a statement. The shares rose 45 percent to $7.80 in New York.

A bid from Shandong, if successful, would be the biggest gold-mining takeover by a Chinese company, according to Bloomberg data.

Lu Haitao, a Shandong spokesman, didn’t answer calls to his mobile phone.

None of the proposals has “progressed beyond the exploratory stage,” according to Jaguar’s statement. The company said it has hired financial and legal advisers without identifying them.

“It seems like there are other offers on the table,” Sachin Shah, a Jersey City, New Jersey-based merger arbitrage strategist at Tullett Prebon Plc, said in a telephone interview yesterday. “It’s possible that you could have major gold names in the U.S. or Canada that may be interested.”

Operating Mines

Jaguar produces gold from three mines in Brazil and is developing a fourth operation in the country. It produced 40,660 ounces in the third quarter and full-year output may be 155,000 ounces to 163,000 ounces, according to an Oct. 18 statement.

There have been $23.8 billion of gold-mining company takeovers announced this year with an average premium of 25 percent, according to data compiled by Bloomberg. There were $32.6 billion of deals in 2010.

Zijin Mining Group Co. is China’s biggest gold producer by market value.

Reuters reported the takeover offer earlier yesterday.

--Helen Yuan, Feiwen Rong, Cathy Chan, with assistance from Liezel Hill in Toronto. Editors: Steven Frank, Simon Casey

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net; Feiwen Rong in Beijing at frong2@bloomberg.net; Cathy Chan in Hong Kong at kchan14@bloomberg.net.

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net.


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