Shares of Eldorado Gold (EGO) were trading down nearly 12% on Monday after the company announced plans to buy European Goldfields in a cash-and-stock deal valued at $2.5 billion Canadian.
The Vancouver, Canada-based discoverer and producer of gold in Brazil, China, Greece and Turkey said the deal will help Eldorado become the dominant gold mining business in the Aegean Region.
European Goldfields is a precious metals development company with gold reserves of 9.2 million ounces and multi-stage assets located in Greece, Romania and Turkey. Together, the companies have about C$11 billion in market capitalization.
The acquisition comes as concerns about the broader economy continue to deepen. Gold, which is typically seen by investors as a hedge to traditional asset classes like stocks, often sees its prices soar during economic uncertainty as traders flee to safe havens.
The deal offers a value of C$13.08 for each European Goldfields common share, representing a premium of 56.5% to its closing price on Dec. 16.
The transaction is slated to close next year, subject to regulatory and shareholder approvals and customary closing conditions. Eldorado's board has unanimously approved the deal.