Eldorado Gold to buy European Goldfields for $2.4B

Canadian Gold and iron producer Eldorado Gold Corp. said Sunday it will buy European Goldfields Ltd. in a deal worth about $2.4 billion, increasing its ability to produce gold.

The Vancouver, British Columbia, company said its offer values each European Goldfields share at 13.08 Canadian dollars ($12.59), based on Eldorado's closing stock price on the Toronto Stock Exchange Friday.

That comes to 2.5 billion Canadian dollars. It's a 10 percent premium to European Goldfields' closing price on the Toronto Stock Exchange Friday.

Eldorado said the deal will create a company with a market capitalization of about 11 billion Canadian dollars ($10.59 billion) and help diversify production. It expects to increase annual production to reach more than 1.5 million ounces of gold by 2015. In October, the company said it expected to produce 650,000 ounces of gold this year.

Eldorado operates in China, Turkey, Brazil and Greece. It has six active mines and other projects in development.

European Goldfields, which is based in Whitehorse, Yukon, operates a mine in Greece and is developing projects in both Greece and Romania. It said it has gold reserves of 10 million ounces within the European Union. It is also a partner of Aktor SA, the largest construction company in Greece.

"Integration of European Goldfields' business with our own will provide Eldorado with the dominant gold mining business in the Aegean Region," said Eldorado CEO Paul Wright in a statement Sunday. He added that European Goldfields' partnership with Aktor will help the combined company safely develop operations in Greece.

Under the deal proposed Sunday, European Goldfields stockholders will receive 0.85 Eldorado share and a fraction of a Canadian cent for each European Goldfields share.

The acquisition requires approval from a majority of Eldorado shareholders and two-thirds of European Goldfields shareholders. Shareholders from both companies will meet in February to vote on the deal.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2011-12-18-Eldorado%20Gold-Acquisition/id-dbda01abc10840aebc2150cd384c124d

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