When Sprott Inc. announced its acquisition of three U.S.-based resource related companies last fall, it was hard to foresee the coming commodity rally.
But the timing means that shareholders of the three acquired firms have gained from a big stock bump that has almost doubled Sprott’s valuation.
Back in September, Sprott agreed to issue 20 million common shares for the takeover, and at that time the company’s stock was trading around $4.50. The transaction closed Monday morning and each share issued comes at $8.67. The rally increases the transaction's total value from around $80-million to $173-million.
The acquired companies were led by Rick Rule, who has now joined the Sprott management team. His firms include Resource Capital Investments Corp., which invests in natural resource companies; Terra Resource Investment Management, which runs segregated managed accounts for institutional and high-net worth investors; and Global Resource Investments Ltd., which is a U.S. brokerage that specializes in natural resource companies.
Mr. Rule and his fellow shareholders of these companies can still earn up to eight million more Sprott common shares if certain performance hurdles are met over the next five years.
**This post has been amended.The timing of the new issuance was incorrect in the previous version.