Ademi LLP is investigating Gatos (NYSE:GATO) (TSX:GATO) for possible breaches of fiduciary duty and other violations of law in its transaction with First Majestic.
In the transaction, Gatos stockholders will receive 2.550 common shares of First Majestic for each common share of Gatos held. The consideration implies a total offer value of $13.49 per common share of Gatos based on the closing price of First Majestic’s common shares. The proposed Transaction implies a total equity value for Gatos of approximately $970 million. Following completion of the Transaction, existing Gatos shareholders will own approximately 38% of First Majestic shares on a fully-diluted basis.
The transaction agreement unreasonably limits competing transactions for Gatos by imposing a significant penalty if Gatos accepts a competing bid. Gatos insiders will receive substantial benefits as part of change of control arrangements.
We are investigating the conduct of Gatos’s board of directors, and whether they are fulfilling their fiduciary duties to all shareholders.