Pan American Silver Corp. agreed to buy smaller producer MAG Silver Corp. in a transaction valued at about US$2.1 billion, giving the bigger rival access to a major mine in Mexico.
MAG shareholders will receive $500 million in cash and 0.755 ordinary shares of Pan American for each stock they own, Pan American said Monday. That values MAG shares at $20.54 based on May 9 closing prices, a 21% premium.
Shares of Pan American fell 14% to $23.29 as of 10:23 a.m. in New York, while MAG was up 7.4% to $18.17.
The deal between the Vancouver-based producers follows a precious metals rally that has seen spot silver prices rise more than 13% this year, fuelling a spate of consolidation among miners. The takeover will give Pan American control over MAG’s 44% stake in the high-grade Juanicipio mine in Mexico, a venture with operator Fresnillo Plc, as well as two undeveloped projects — Deer Trail in Utah and Larder in Canada. The deal would bring down Pan American’s costs by about 20%, according to a presentation Monday.
“Our acquisition of MAG brings into Pan American’s portfolio one of the best silver mines in the world,” Pan American Chief Executive Officer Michael Steinmann said. “We see future growth opportunities through the significant exploration potential at Juanicipio as well as MAG’s Deer Trail and Larder properties.”
Juanicipio produced 18.6 million ounces of silver in 2024, up 10% from the prior year, according to the Silver Institute. That makes it the world’s third-biggest producing mine.
National Bank of Canada advised Pan American while Bank of Montreal and GenCap Mining Advisory Ltd. were co-financial advisers to MAG. The deal comes with a $60 million break-up fee.
With assistance from Doug Alexander.
Sybilla Gross and James Attwood, Bloomberg News
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