Royal Gold Inc. said Friday it has signed an arrangement agreement to acquire International Royalty Corp. , trumping a rival bid from gold-focused royalty company Franco-Nevada Corp. .
Under terms of the agreement, Royal is offering either $7.45 cash or 0.1385 of a share for IRC, valuing the company at about $749-million.
IRC said it had determined the Royal Gold offer to be a "superior proposal" and one that was fair to shareholders.
"The transaction value to our shareholders reflects the result of a rigorous bidding process that began several weeks ago. Combining the assets of these two great companies will build a giant mineral royalty company with significant growth potential," said Douglas Silver, IRC's founder and chief executive officer.
Franco-Nevada, which had been in talks with IRC since late October, sweetened its bid to a $639-million cash offer last week after IRC received the larger rival offer. As IRC did not respond formally to the increased bid, Franco-Nevada was pushed to make the offer unsolicited.
The Royal Gold bid has a cash cap of $350-million (U.S.) and a limit of 7.75 million common shares.
IRC shareholders who are Canadian residents also have the option to elect 0.1385 exchangeable shares of a Canadian subsidiary of Royal Gold in lieu of electing the company's common shares. Each exchangeable share can be redeemed for one common share of Royal Gold, with a maximum of 7.8 million shares issued in the aggregate.
If the agreement is terminated, IRC will pay a fee of $32-million.
The deal is expected to close in February, 2010.
IRC is a mineral royalty company with 85 royalties on 20 projects around the world. Its properties contain gold, silver, nickel, copper, cobalt, zinc and coal.
Denver-based Royal Gold acquires and manages precious metals royalties.