11:50 AM EDT, 09/05/2024 (MT Newswires) -- First Majestic Silver ( AG ) (AG.TO, AG) on Thursday said it agreed to acquire Gatos Silver ( GATO ) for shares worth US$970 million to gain control of Gatos' silver operations in Mexico.

The companies said the transaction would consolidate the Cerro Los Gatos, San Dimas and Santa Elena silver mining operations in Mexico under one company.

Under the terms, Gatos shareholders will receive 2.55 shares of First Majestic for each share of Gatos held. The price implies a value of US$13.49 per Gatos share, a 16% premium based on each company's closing prices and 20-day volume weighted average prices on the New York Stock Exchange ending Sept. 4.

Following the transaction, existing Gatos shareholders will own about 38% of First Majestic shares on a fully-diluted basis.

"The acquisition of Gatos Silver ( GATO ) is a highly compelling and transformative transaction that meaningfully enhances First Majestic's operating platform through the addition of 70% of Cerro Los Gatos - a high quality, long-life, unencumbered, free cash flow generating asset in the mining-friendly state of Chihuahua, Mexico," said Keith Neumeyer,, First Majestic's chief executive.

"We are pleased to enter into this transaction with First Majestic, as it provides our shareholders an attractive immediate premium and the opportunity to retain exposure to the high quality, long-life Cerro Los Gatos asset, now within a well-established intermediate primary silver producer," Gatos chief executive Dale Andres said.

The transaction is expected to close early next year.

First Majestic's shares were last seen down $0.40 to $6.74 on the Toronto Stock Exchange, while Gatos Silver ( GATO ) shares were up $0.10 to $15.85.

Price: 6.42, Change: -0.72, Percent Change: -10.08