Sprott completes Global Resources deal

Date: Tuesday, February 8, 2011
Author: Investment Executive

Sprott Inc. (TSX:SII) has completed its acquisition of Global Resource Investments, Ltd., Terra Resource Investment Management, Inc. and Resource Capital Investment Corporation, the Toronto-based asset management company said Monday.

In addition, Rick Rule, founder of the Global companies, has joined the Sprott investment and management teams.

“We are delighted to have completed this transaction and will move quickly to integrate the Global companies with the Sprott group of companies. We look forward to working together to execute on the business development activities that we are initiating,” said Peter Grosskopf, CEO of Sprott, in a release.

“Combining the significant investment talents of both organizations will enable us to provide clients in Canada, the U.S. and abroad with access to a broader range of investment opportunities. We also expect the acquisition of the Global Companies to be immediately accretive to Sprott shareholders.”

The $168.8 million purchase price was satisfied by the issue of 19,467,500 common shares of Sprott with a value of $8.67 per share, being the closing price of Sprott shares on the Toronto Stock Exchange on February 4.

An additional 532,500 common shares of Sprott will be provided to employees of the Global companies after closing. In addition, the seller and certain current and future employees will be eligible to earn up to an additional eight million common shares of Sprott with the achievement of certain EBITDA targets by the Global Companies.

Since the initial announcement of the proposed transaction in September 2010, the investment performance of the Global companies’ assets under management has been exceptionally strong, similar to the results generated by the equity mutual funds and hedge funds managed by Sprott, the company said.