January 14, 2013 / 12:42 PM / 5 years ago

UPDATE 2-Alamos Gold makes C$780 mln bid for Aurizon Mines

* Alamos bid offers 36 pct premium to Aurizon shareholders

* Aurizon says is reviewing offer

* Analysts skeptical a rival bid will emerge (Adds comments from CEO, analyst; share price move)

By Euan Rocha

TORONTO, Jan 14 (Reuters) - Alamos Gold Inc made an unsolicited offer on Monday to buy fellow Canadian miner Aurizon Mines Ltd for about C$780 million ($792.96 million) in cash and stock, aiming to win control of the Casa Berardi gold mine in Quebec.

If successful, the deal would leave Toronto-based Alamos with two producing gold mines located in jurisdictions considered politically stable and create a combined entity with an estimated market capitalization of about C$2.6 billion.

Alamos, which owns and operates the Mulatos mine in Mexico, has offered C$4.65 a share for Aurizon, a 36 percent premium on the stock’s closing price of C$3.41 on Friday.

“While we view the offer as providing reasonable value, there appears to be room for a subsequent sweetened offer if needed,” said National Bank analyst Paolo Lostritto in a note to clients.

Even so, Lostritto and others doubt that Aurizon can entice a suitable white knight that would trump Alamos’s offer.

“We are not convinced Aurizon’s production potential is large enough to attract the largest mid-tiers as white knights,” said Scotiabank analyst Trevor Turnbull in a note to clients.

That view appeared to be shared by investors, Aurizon shares surged 33 percent on Monday to C$4.55, in line with the offer, while Alamos tumbled almost 12 percent to close at C$14.90 on the Toronto Stock Exchange.

Aurizon said it was working with advisers to evaluate the proposal and would make recommendations in the best interest of it shareholders. It plans to issue a statement later on Monday.

Alamos has made several approaches to Aurizon over the years, Chief Executive John McCluskey said on a conference call.

“The reality is that there’s just never been any interest at all on Aurizon’s side,” said McCluskey, responding to a question on the conference call.

“We choose to grow only where growth will create real value, producing strong margins and generating substantial cash flow,” he said. “In terms of acquisition strategy, the whole must be greater than the sum of its parts, and we believe we will achieve that by bringing Aurizon and Alamos together.”

FULLY FINANCED

Alamos has already secured a sizable ownership stake in Aurizon. In a separate announcement on Monday, Alamos said it has acquired 26.5 million Aurizon shares, giving it a roughly 16 percent ownership position in the company and making it Aurizon’s largest shareholder.

Aurizon shareholders have at least 35 days after the mailing of the circular to accept the offer.

Alamos said the offer, which is fully financed, did not require approval by its shareholders.

Dundee Capital Markets acted as Alamos’s financial adviser.

Alamos also said it could support the growth of the enlarged company through its balance sheet and operating cash flow without having to issue any equity capital. Alamos said it plans to remain debt-free.

Alamos is seeking to list its shares on the New York Stock Exchange, a move that the company believes will boost liquidity in its stock and benefit shareholders.

$1=$0.98 Canadian Reporting by Euan Rocha in Toronto and Sandhya Vijayan in Bangalore; Editing by Supriya Kurane; and Peter Galloway

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