Toronto, Ontario: October 19, 2012 — Galway Resources Ltd. (GWY: TSX-V) (“Galway”) is pleased to announce the execution of an arrangement agreement (the “Arrangement Agreement“) with AUX Acquisition 2 S.àr.l. and its wholly-owned Ontario subsidiary (collectively, “AUX“), under which AUX has agreed to acquire all of the outstanding common shares of Galway (other than common shares of Galway held by AUX and its affiliates) (the “Galway Shares“) by way of a plan of arrangement (the “Arrangement“).
Under the transaction Galway shareholders will receive Cdn$2.05 in cash, 0.9 of a share in a new company to hold the Vetas gold project and 1.0 share in a new company to hold the Victorio tungsten-molybdenum project. The new companies will be well capitalized with US$18 million of cash and US$12 million of cash, respectively. Upon closing of the transaction, existing Galway shareholders will hold 90% of the Vetas SpinCo and 100% of the Victorio SpinCo. AUX will have the right to nominate one director for election to the board of directors of the Vetas SpinCo.
Can you spot a leak in the days leading up to this announcement?
For the rest of us who don’t have access to a little birdie but do have a little patience (expected deal close by year-end) there may yet be some money on the table. Specifically, the two new companies to be spun-off to Galway shareholders are worth a combined $0.20 per fully diluted share if only valued for their cash (i.e. no project value), implying a deal floor price of $2.25 per share. Despite this, Galway traded as low as $2.02 on Friday after the announcement, a full 3 cents below the cash offer price, and perhaps we’ll be given additional opportunities to accumulate shares near this level. There is of course a risk that the transaction falls through for whatever reason, but given the juicy premium and AUX’s aggressive move to acquire both Galway and Calvista Gold (also announced Friday) this seems unlikely. Interestingly a little bird seems to have been active over at Calvista as well: