Investors of Great Bear Royalties (TSE: GBRR) are likely celebrating today, as the company announced that it will be acquired by Royal Gold (RGLD). The acquisition will be paid for fully in cash. Thus, there will be no financing conditions associated with the transaction.
Investors of Great Bear will receive C$6.65 per share, which equates to a total purchase price of C$200 million. This is a significant premium of 51.1% from its previous closing price on July 8, 2022. In fact, the share price has traded higher than the purchase price for only a brief period of time in November.
Great Bear’s directors and officers, which make up 10.5% of the investor base, support the acquisition. Indeed, they claim that it removes dilution, construction, commodity, and execution risks for shareholders.
What Do Analysts Think of Great Bear Stock?
In the past three months, only one analyst has issued a price target for Great Bear, which stands at C$7.25 per share. Although some investors might look at this and think that the company is undervaluing itself, it is important to note that this price target was from three months ago. Therefore, it might be outdated based on current economic conditions.
In addition, it’s not significantly higher than the purchase price of C$6.65 and does not really justify the additional risks that would be associated with rejecting the deal.
Final Thoughts – GBRR Shareholders are Profiting While Reducing Risks
By accepting the deal, GBRR shareholders are realizing significant profits while also removing risks. Considering the turmoil in financial markets that has been witnessed during the past several months, investors of GBRR are undoubtedly happy to finally see some positive news. This will allow them to take profits on their position and reinvest in other beaten-down stocks.