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Silver Wheaton Corp. (SLW) to Acquire Silverstone Resources (TSX: SST)

Silver Wheaton Corporation announced that they have entered into a definitive agreement pursuant to which Silver Wheaton will acquire all of the outstanding common shares of Silverstone in exchange for 0.185 common shares of Silver Wheaton for each common share of Silverstone Resources.

In analyzing the specifics of this agreement, we see that based on the 20-day volume-weighted average of Silver Wheaton’s common shares of C$8.58, the transaction value per Silverstone common share is C$1.59, and the total transaction value is approximately C$206 million. This represents a premium of 40% based on the 20-day volume-weighted average of both companies’ common shares on the TSX for Silver Wheaton and the TSX Venture for Silverstone.

Silverstone’s board of directors and officers along with Capstone Mining Corp. (“Capstone”), its largest shareholder (representing an aggregate of 30.5 million shares (24%) of Silverstone, fully diluted); have entered into support agreements in respect of the transaction. Based on a recommendation from a special committee of independent directors of Silverstone the unconflicted members of Silverstone’s board of directors have unanimously supported the transaction and recommend the shareholders of Silverstone vote their shares in favor of the offer.

One of the major highlights of this transaction is the immediate premium for Silverstone shareholders. Silverstone shareholders with now have an ownership stake in the largest silver streaming company in the world. Another benefit of this transaction will be exposure to Silver Wheaton’s organic silver sales growth profile with long life, low cost and high quality mines all located in politically stable jurisdictions, including Goldcorp’s world-class Penasquito mine in Mexico which is now in production and expected to be Silver Wheaton’s growth engine for many years to come.

While there are even more benefits than the ones discussed, perhaps the most optimal feature of this transaction for Silverstone shareholders will be their significantly enhanced trading liquidity on both the Toronto and New York Stock Exchange. This deal will undoubtedly make Silver Wheaton Corp. a major player in the marketplace and will give Silverstone shareholders major leverage that will have a substantial impact on their investment.

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