Maverix Metals Inc (TSX:MMX).’s combination with Triple Flag Precious Metals (TSX:TFPM) should create a robust intermediate roayltyco, according to analysts at Stifel.
Nevertheless, the broker said as a result of the offer, it has reduced its price target to C$5.25 from C$7.75 and lowered its rating to hold from buy.
Despite being below the broker’s prior target price, Stifel said it sees the merits of deal and believes the combination will be poised for a re-rate.
Both companies have shown consecutive year-on-year revenue GEO (gold equivalent ounces) growth since inception with the combined company showing an immediate implied GEO rate of 115-120koz and a 5-year average estimated growth to over 140koz GEOs. analysts wrote.
READ: Maverix Metals sees net income and revenue rise in 'strong' third quarte
With a share component to the deal, Maverix investors should be able to participate in the re-rate of the proforma company, analysts noted.
No impediments are foreseen in closing the offer. “Although there's always some potential for another bidder to emerge, we are presently of the view that there's a low likelihood of a competing bid," analysts said.
Stifel pointed out that the largest shareholders, together with officers and directors of Maverix, which collectively control approximately 57% of Maverix’s shares, have backed the deal.
The broker’s comments came as the company posted quarter three results which were broadly as expected.
The company reiterated 2022 adjusted guidance of 28-31k GEOs, and Stifel said the portfolio was on track to achieve the upper end of the guidance range.
Shares in Maverix Metals were trading 0.78% lower at C$5.21.
Contact the author at jeremy@proactiveinvestors.com