Pan American Silver (TSX:PAAS,NYSE:PAAS) is set to close its US$2.1 billion acquisition of MAG Silver (TSX:MAG,NYSEAMERICAN:MAG) after receiving final clearance from Mexico’s Federal Economic Competition Commission, cementing one of the year’s largest transactions in the sector.
The approval clears the way for the all-cash-and-stock deal to be completed on or about September 4 of this year, the companies announced on Monday (August 25).
Under the terms of the arrangement, MAG shareholders will receive either US$20.54 in cash per share or the default consideration of US$0.0001 in cash plus 0.755 of a Pan American share for each MAG share held.
According to company filings, Pan American expects to issue about 60 million shares to MAG shareholders when the deal closes, leaving them with roughly 14 percent of the combined company on a fully diluted basis.
The transaction values MAG at about US$2.1 billion, a 21 percent premium to its closing price and a 27 percent premium to its 20 day volume-weighted average price on the NYSE American as of May 9, when the deal was announced.
For Pan American, one of the world’s largest primary silver producers, the prize is MAG’s 44 percent joint-venture stake in the Juanicipio mine in Mexico’s Fresnillo Silver Trend.
The large-scale underground operation is among the world’s highest-grade primary silver mines, producing 4.5 million ounces of silver in the first quarter of 2025 alone at an all-in sustaining cost of US$10.64 per ounce of silver equivalent. Annual output this year is forecast between 14.7 million and 16.7 million ounces.
“This strategic acquisition further solidifies Pan American as a leading Americas-focused silver producer,” said Michael Steinmann, Pan American’s president and CEO, in the May announcement. “Our acquisition of MAG brings into Pan American’s portfolio one of the best silver mines in the world. Juanicipio is a large-scale, high-grade, low-cost silver mine that will meaningfully increase Pan American’s exposure to high margin silver ounces.”
Steinmann added that the deal gives Pan American future growth opportunities through MAG’s exploration properties in Utah and Ontario.
Consolidation wave in silver
The tie-up between Pan American and MAG continues a consolidation trend sweeping the silver sector, with a stronger metal price and investor appetite for scale driving a string of deals.
Recent transactions include First Majestic Silver’s (TSX:FR,NYSE:AG) US$970 million takeover of Gatos Silver, Coeur Mining’s (NYSE:CDE) US$1.7 billion acquisition of SilverCrest Metals and Endeavour Silver’s (TSX:EDR,NYSE:EXK) US$145 million purchase of Compañia Minera Kolpa in Peru.
Pan American operates 10 mines across Canada, Mexico, Peru, Brazil, Bolivia, Chile and Argentina, and also owns the Escobal mine in Guatemala, currently on care and maintenance. For MAG, the deal marks the end of its run as an independent company, but gives its shareholders a stake in a significantly larger producer.
In addition to Juanicipio, MAG has been advancing the Deer Trail Project in Utah and the Larder Project in Ontario’s Abitibi region. Those properties will now shift under Pan American’s control.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
