Current Price – $0.365
Buyout Price – $0.4
Upside – 10%
Expiration Date – TBD
This merger arbitrage transaction was suggested by Vladimir.
Legend Gold (listed in Canada) is due to be acquired by Altus Strategies (listed in London). This is an all stock transaction and LGN shareholders will receive 3 shares of Altus for each LGN share held and eventually own 27% of the combined company. Merged company will seek dual listing in UK and Canada. The spread currently stands at 10%. IB has sufficient cheap (<1%) borrow for shorting Altus.
Both companies participate in mining projects in Africa and both businesses seem to be complimentary (see slide 15-16).
At the same time both stocks are nano caps and very illiquid with no trading at all on some of the days. Bid/Ask spreads are wide and opening hours overlap only for a short period. This makes execution of the hedged trade quite complicated, which is probably the main reason for the large M&A spread to exist.
Merger is subject to customer closing conditions, but at least shareholder approvals on both side seem to be almost a done deal:
“Altus’ officers and directors holding in aggregate approximately 40% of the currently issued and outstanding shares of Altus, have agreed to vote in favor of any Altus shareholder resolutions required to complete the Proposed Transaction. Altus will seek shareholder authority for the issue of the new Altus Shares and a disapplication of pre-emptive rights to permit the issue of Altus Shares to the shareholders of Legend. Legend will seek shareholder authority to approve the Proposed Transaction. Legend’s directors, officers and consultants holding approximately 58% of the currently issued and outstanding shares of Legend, have agreed to vote in favor of the Arrangement.”
4 thoughts on “Legend Gold (LGN.CVE) – Merger Arbitrage – 10% upside”
IB has 0 borrow for Altus but I might be worng
This morning IB showed 1.4m shares available for borrowing, but now I do not see any either.
this name is a micro cap + very low volume, it was probably a mistake….
if you have short sold some shares, I would bet that IB will recall you pretty soon !
Acquisition closed as expected, however Altus shares were not shortable. However, as Altus shares were trading at the same price as at the time of posting, unhedged position resulted in 10% return.