Teck to buy SilverBirch to boost oilsands assets

Mon Jan 9, 2012 10:47am EST
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By Cameron French

(Reuters) - Teck Resources Ltd TCKb.TO has agreed to buy SilverBirch Energy Corp SBE.V for C$435 million ($424.70 million)in cash and stock to take full control of the Frontier oil sands project in northern Alberta.

The deal drove SilverBirch's shares up by 32 percent in early trading on Monday.

Vancouver-based Teck, which is primarily a copper and coal producer, has a small cluster of long-term oil sands assets, including a 20-percent stake in Suncor Energy's (SU.TO: Quote) and Total SA's (TOTF.PA: Quote) Fort Hills project.

Under the terms of the deal, SilverBirch shareholders will receive C$8.50 in cash and one share of a new company, SilverWillow Energy Corporation, for each share they hold, the companies said.

SilverWillow will hold substantially all of the assets of SilverBirch other than SilverBirch's 50 percent interest in Frontier. Teck will also contribute C$25 million in working capital to SilverWillow as well as its 50-percent stake in several leases that it currently jointly owns with SilverBirch.

The working capital alone works out to about 50 Canadian cents a share, SilverBirch Chief Executive Howard Lutley said on a conference call

About 50 minutes into trading, Silverbirch's shares were up C$2.30 at C$9.50 on the TSX Venture Exchange, well ahead of the cash portion of the deal.

Teck was down 56 Canadian cents, or 1.5 percent, at C$37.79 on the Toronto Stock Exchange.   Continued...