Triple Flag to acquire Maverix Metals for $3.92 per share, sees accretion

Triple Flag (TFPM) and Maverix Metals (MMX) announced that they have entered into a definitive agreement in which Triple Flag will acquire all of the issued and outstanding common shares of Maverix pursuant to a plan of arrangement, positioning Triple Flag as the emerging senior streaming and royalty company. This combination is expected to be accretive on a NAV-per-share and cash-flow-per-share basis. Pursuant to the transaction, Maverix shareholders may elect to receive either $3.92 in cash or 0.360 of a Triple Flag share per Maverix share held, representing share consideration of $3.92 per Maverix share based on the closing price of Triple Flag shares on November 9 of $10.89. The shareholder election will be subject to pro-ration such that the cash consideration will not exceed 15% of the total consideration and the share consideration will not exceed 85% of the total consideration. Maverix shareholders who do not elect to receive either Triple Flag shares or cash will be deemed to elect default consideration of 0.360 Triple Flag shares per Maverix share. The exchange ratio implies a premium of 10% based on the closing share prices of Triple Flag and Maverix on the New York Stock Exchange on November 9 and a premium of 22% based on the 10-day volume-weighted average share prices of Triple Flag and Maverix on the NYSE as of November 9. The purchase price implies a total equity value for Maverix of $606M on a fully diluted basis. Upon completion of the Transaction, existing Triple Flag and Maverix shareholders would own approximately 77% and 23% of the combined company, respectively, on a fully diluted basis. Triple Flag shareholder Elliott Investment Management L.P. and Maverix shareholders Newmont Corporation, Pan American Silver Corp. and Kinross Gold Corporation are all supportive of the combination. The combined company will continue as Triple Flag Precious Metals headquartered in Toronto, Ontario, and will be led by Shaun Usmar as CEO. Following the completion of the transaction, it is expected that Geoff Burns, founder and chair of Maverix, and another nominee of Maverix will join the Triple Flag board of directors. The combined company will continue to pay an annualized dividend of 20c per Triple Flag share, resulting in an effective dividend increase of over 40% for Maverix shareholders pro forma, based on the exchange ratio. Under the terms of the agreement, the transaction will be carried out by way of a court-approved plan of arrangement under the Canada Business Corporations Act, and will require the approval of at least 66 2/3% of the votes cast by the shareholders of Maverix at a special meeting and if required, minority shareholder approval in accordance with Multilateral Instrument 61-101. Newmont Corporation (NEM) and Pan American Silver (PAAS), together with all of the officers and directors of Maverix, collectively control approximately 57% of the common shares of Maverix on a fully diluted basis and have entered into voting and support agreements pursuant to which they have agreed to vote their shares in favor of the transaction. As the Triple Flag shares to be issued to the shareholders of Maverix in the Transaction will exceed 25% of the issued and outstanding common shares of Triple Flag, Triple Flag shareholder approval of the transaction is required under Section 611(c) of the rules of the TSX. Triple Flag is relying on the exemption in Section 604(d) of the rules of the TSX, whereby instead of holding a shareholder meeting, Triple Flag has obtained the written consent for the Transaction of shareholders of Triple Flag holding greater than 50% of the issued and outstanding common shares of Triple Flag. Entities controlled by Elliott Investment Management L.P., which control approximately 83% of the issued and outstanding common shares of Triple Flag, have entered into voting and support agreements pursuant to which they have provided written consent to the transaction, and have agreed, if required, to vote their shares in favor of the Transaction at a Triple Flag shareholder meeting. Each of the officers and directors of Triple Flag have also entered into voting and support agreements, pursuant to which they have agreed to vote their shares in favor of the Transaction in the event of a Triple Flag shareholder meeting. Completion of the Transaction is also subject to regulatory and court approvals and other customary closing conditions. The agreement includes customary provisions, including non-solicitation by Maverix of alternative transactions, a right of Triple Flag to match superior proposals and an approximately $24M termination fee, payable under certain circumstances. Complete details of the transaction will be included in a management information circular to be delivered to Maverix shareholders in the coming weeks. Subject to receiving requisite court approval, the special meeting of shareholders of Maverix is expected to be held in early January 2023 and the transaction is also expected to close in January 2023. In connection with and subject to closing the Transaction, it is expected that the common shares of Maverix will be delisted from the TSX and the NYSE American and that Maverix will cease to be a reporting issuer under Canadian and U.S. securities laws.