The pending merger proposal doesn’t seem to have affected the traders playing with ECU Silver Mining Inc. (TSE:ECU) (PINK:ECUXF) – share price gaped further down today.
ECU stock continues to go down in a weird manner although things might soon change as the news on planned merger spread. The trading volume currently doesn’t indicate the downtrend could extend very far either.
Share price bounced the short term support at 95 cents today. It could gap further down tomorrow, however intraday price action is contradicting such openings for the third consecutive day already, meaning the price gaps down but goes somewhat back up during the day.
What is very intriguing in the current situation is the announcement of merger of equals made on June 24, 2011. The deal doesn’t seem to stand up to the term used and the details resemble a simple takeover.
The merger will be done with Golden Minerals Company (AMEX:AUMN) (TSE:AUM). If this was a merger of equals both the companies should cease to exist after the merger and a new junior mining company should be created to rule the current portfolios of both entities.
The new entity however will carry the name Golden Minerals which partially diverges from the definition of merger of equals. Furthermore the shares of ECU will be each exchanged for 0.05 shares of Golden Minerals and $0.000394 in cash. This makes it more of an acquisition than a merger and is far from the declared term.
The transaction still has to be approved by the shareholders of both entities. Proposition with exact details will be mailed to shareholders in July 2011.
