The agreement sees European Goldfield’s former suitor, Qatar Holdings, routed despite signing a deal to buy a chunk of the miner’s shares and hand it a $600m loan.
The unanimous agreement between the boards of Eldorado and European Goldfields will see shareholders of the former end up with 78 per cent of the new merged company while owners of European Goldfields will get the rest.
The share swap equates to a valuation of £1.55bn for European Goldfields and a premium of around 50 per cent on both companies’ stock as of the start of December, before European Goldfields confirmed it had been approached.
Although the Qatari loan and share purchase could in theory go ahead in some form, it would have to be renegotiated with Eldorado and the 22 December shareholder vote on the deal has been suspended. If either Eldorado or European Goldfields back out of the new deal, it will cost them a C$75m termination fee. The combined entity will have current gold production of 650,000 ounces a year.
European Goldfields was advised by Liberum Capital’s Michael Rawlinson and Tom Fyson. Rawlinson is known for advising on a string of high-profile resources deals, including Glencore’s £36.5bn float earlier this year.