Yamana, Northern Orion would merge, take over Meridian

Section:

From Canadian Press
via Brandon Sun, Brandon, Manitoba
Wednesday, June 27, 2007

http://www.brandonsun.com/story.php?story_id=60388

TORONTO -- Yamana Gold Inc. and Northern Orion Resources Inc. are proposing to merge and take over Meridian Gold Inc. -- a combination that would create one of the top five gold producers in the world.

Together the three companies would have a market value of more than $8 billion and an estimated annual gold production of more than 1.4 million ounces by 2009, compared to a combined base in 2006 of about 660,000 ounces.

Peter Marrone, chairman and CEO of Yamana, describes the Yamana-Northern Orion bid for Meridian as "unsolicited but not hostile ... but not friendly either."

He said Yamana has discussed the potential merger with Meridian in the past couple weeks.

"We confident they (Meridian and its shareholders) will see there is a lot of merit and need to act quickly," Marrone said in an interview.

The combination "will make us very much on the radar screen as a big player, one of the top five gold mining companies in the world."

Executives at Meridian could not immediately be reached for comment.

As part of the proposal, Meridian shareholders would receive 2.235 of a Yamana share plus $3.15 in cash which, based on Yamana's closing share price Wednesday of $13.02, for a total of $32.25 per share.

The cash and share combination is a premium of about 23 per cent over Meridian's closing share price Wednesday, and a 24.4 per cent premium of its 20-day average closing price.

Northern Orion shareholders would receive 0.543 of a Yamana share which, based on Yamana's closing share price Wednesday, is equal to $7.07 per share -- a 21.3 per cent premium over Northern Orion's closing share price Wednesday and a 28.3 per cent premium based on its 20-day average closing price.

To complete the transaction, Yamana would issue 309.4 million new common shares (225.7 million and 83.7 million common shares to Meridian and Northern Orion shareholders, respectively) plus cash US$300 million cash to Meridian shareholders -- $200 million of which will come from Northern Orion, and $100 million from Yamana.

The shareholdings are anticipated to be 53.4 per cent existing Yamana shareholders, 34 per cent existing Meridian shareholders and 12.6 per cent existing Northern Orion shareholders, Yamana said.

If approved, Marrone said, he expects the combined company to keep the Yamana Gold name but that he would "entertain whatever was reasonable."

For the deal to go through Yamana and Northern Orion have agreed that Yamana will acquire all of the issued and outstanding securities of Northern Orion if Yamana can acquire at least 66 2/3 per cent of Meridian shares.

"The combination of Yamana, Northern Orion and Meridian makes sense from a strategic and geographic perspective and we believe that the proposed structure is a creative way to unlock value for all shareholders involved," Marrone said.

The acquisition of Northern Orion by Yamana has the unanimous support of the boards both Northern Orion and Yamana, the companies said in a release.

"We will have a solid platform for further growth in our core areas of Brazil, Chile, Argentina, and Central America," David Cohen, president and CEO of Northern Orion said in a release. "From this platform, and with the significant cash flow that will be generated, the combined company will be well positioned to create further shareholder value through additional growth throughout the Americas."

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