06:36 AM EDT, 05/12/2025 (MT Newswires) -- Pan American Silver ( PAAS ) agreed to acquire Canadian silver mining company MAG Silver ( MAG ) in a cash-and-stock deal worth roughly $2.1 billion.

Shareholders of MAG Silver ( MAG ) can elect to receive $20.54 per share under the terms of the transaction, representing a 21% premium to the firm's closing share price on Friday on the New York Stock Exchange American, the companies said in a joint statement Sunday. Alternatively, investors can choose to receive 0.755 Pan American shares per MAG Silver ( MAG ) share, or a combination of cash and shares, with total cash payments across all shareholders consisting of $500 million and the rest paid in Pan American shares.

Pan American's US-listed shares dropped 7% in Monday's most recent premarket activity, while MAG Silver ( MAG ) gained 7.8%.

The deal, which requires approval by a majority of MAG Silver's ( MAG ) shareholders and clearance from Mexican antitrust laws, is expected to be completed in the second half. Upon completion, Pan American plans to issue about 60 million shares to MAG Silver's ( MAG ) stockholders, who are expected to own about 14% of Pan American shares after the deal closes.

"This transaction represents a compelling opportunity for our shareholders, providing an immediate premium and meaningful exposure to Pan American's world-class assets and proven growth strategy," MAG Silver ( MAG ) Chief Executive George Paspalas said in the statement. "Our shareholders will participate in an exciting future defined by operational excellence, substantial exploration potential, and strong financial stewardship with significant portfolio exposure."

The transaction will give Pan American access to MAG Silver's ( MAG ) 44% holding in the large-scale Juanicipio silver mine joint venture in Mexico. The mine is operated by Fresnillo, which owns the remaining 56% stake in the venture.

"Juanicipio is a large-scale, high-grade, low-cost silver mine that will meaningfully increase Pan American's exposure to high margin silver ounces," Pan American Chief Executive Michael Steinmann said in the statement. "Furthermore, we see future growth opportunities through the significant exploration potential at Juanicipio as well as MAG's Deer Trail and Larder properties."

Juanicipio is estimated to generate free cash flow of about $200 million in 2025. Pan American anticipates the acquisition to add 58 million ounces of silver to its probable mineral reserves, 19 million ounces to its indicated mineral resources, and 35 million ounces to its inferred mineral resources.