The proposed acquisition of Allied Gold (TSX:AAUC) by Zijin Mining Group (HKG: 2800) has fallen apart amid delays in securing Chinese regulatory approval for the proposed US$4 billion ($5.8 billion) deal.
The companies abandoned the deal after concluding that “there is no reasonable likelihood” that the remaining conditions for completing the transaction could be met by the 29 July deadline.
Zijin had offered to buy Allied at US$44 a share in cash, giving the Canadian gold miner an implied value of nearly US$4 billion.
Following the announcement in December, both sides worked to close the deal, which has since received approvals in Canada and other international jurisdictions. China, however, has doubts over the transaction and has yet to approve the deal.
According to the Financial Times, Beijing’s delay stems from concerns over the premium that Zijin is paying for the acquisition, as well as the jurisdictional risks of Allied’s Africa-based assets.
While the companies extended the deadline to complete the deal to accommodate this delay, they have yet to gain Chinese approval, leading to both sides scrapping the deal.
The transaction, had it gone through, would represent one of the largest takeovers of a Canadian mining company by a Chinese group.
Instead, Zijin will make a US$295 million equity investment in Allied for a 9.2% stake, subject to Canadian and US exchange approvals.
Allied plans to use the proceeds for the continued advancement of its growth initiatives. The company operates the Sadiola Gold Mine in Mali and a gold mining complex in Côte d’Ivoire, with a combined output of 375,000 ounces annually. A third producing asset, the Kurmuk Gold Mine in Ethiopia, is set to come online this year.
Allied Gold is a Canadian-based gold producer, with a portfolio of three producing assets and development projects across Africa.
Write to Jackson Chen at Mining.com.au
Image: Allied Gold
