Genesis, Vault to merge as $12.6B gold producer after Regis steps aside in M&A scrap

Genesis Minerals (ASX:GMD) and Vault Minerals (ASX:VAU) can now go ahead with their $12.6 billion merger, which will immediately create one of Australia’s largest gold producers, after Regis Resources (ASX:REG) this week explained to shareholders it was not planning to match Genesis’ surprise $5.6 billion offer.

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Regis had been all lined up to join with Vault in a $4.5 billion deal, but that’s now been scuppered after Genesis stormed in at the eleventh hour.

The original suitor dropped out of the race midway through Monday after it declined to exercise a right to match. There had been whispers that the gold producer was interested in a scrap for Vault, but that never eventuated.

The main reason, Regis told shareholders yesterday, was that it could “not make a higher valuation stack up” and didn’t want to be forced to overpay.

“The Regis board determined that the terms that would be required to match the Genesis proposal do not meet the value and return thresholds that Regis applies to all growth opportunities,” the company told the ASX on Monday.

With Regis out of the way, Geneis and Vault will now prepare to go through all formalities for their union. Once joined, the Western Australia operations will likely hit 600,000 to 700,000 ounces of annual gold production.

The new company will have around $12.6B in market capitalisation, $611M in net cash, and possible synergies worth up to $2B in the Leonora-Laverton district.

Under the now-sealed merger bargain, Vault Minerals shareholders will get 0.7629 Genesis shares and 47.5¢ cash per Vault share, which values Vault at ~$5.6 billion and represents a 15.7% premium to its pre-deal price.

VAU will start Tuesday at $4.91/share.

On the other side of the new merger, GMD up +3.7% yesterday.

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