UPDATE 3-Franco-Nevada bids C$830 million for Gold Wheaton

* Cash and share deal values Gold Wheaton at C$5.20/share

* Quadra to sell Gold Wheaton shares for C$262.6 mln

* Franco-Nevada shares fall 3.08 pct to C$32.38

* Gold Wheaton shares up 14.61 pct to C$5.02
(Adds deal details, conference call quotes)

By Julie Gordon

TORONTO, Dec 13 (BestGrowthStock) – Franco-Nevada (FNV.TO: ), a
Canadian gold royalty company, said on Monday it will buy
competitor Gold Wheaton (GLW.TO: ) in a cash and share deal worth
C$830 million ($826 million).

Franco-Nevada said the takeover is a key component of its
midterm growth plan as it looks to diversify its portfolio of
precious metal royalties.

“We believe we’re going from just north of $100 million of
precious metals revenue as of the end of last year to over $350
million of precious metals revenue in 2015, of which Gold
Wheaton is a significant component,” Franco-Nevada Chief
Executive David Harquail told a conference call.

Franco Nevada, which provides mining companies upfront cash
in exchange for future royalties, added that the deal will give
it the cash flow needed to execute further deals going
forward.

The Toronto-based company will pay C$5.20 for each Gold
Wheaton share, a 19 percent premium over the smaller gold
royalty company’s closing price on Friday on the Toronto Stock
Exchange.

The payment will be 40 percent in cash, or C$2.08 per
share, and 60 percent in shares, or 0.0934 of a Franco-Nevada
share.

Franco-Nevada shares dropped 3.08 percent to C$32.38 on
Monday on the Toronto Stock Exchange, while shares of
Vancouver-based Gold Wheaton rose 14.61 percent to C$5.02.

Gold Wheaton was the most heavily traded stock on the
market.

Separately, miner Quadra FNX (QUX.TO: ) said that it would
sell its 56.5 million Gold Wheaton shares to Franco-Nevada for
C$262.6 million, or C$4.65 a share.

Quadra said it will get a top-up if the deal between Gold
Wheaton and Franco-Nevada goes through within 12 months, which
should value its Gold Wheaton shares at C$293 million.

PLATINUM GROUP

The deal with Gold Wheaton will see Franco-Nevada nearly
double its exposure to the platinum group metals (PGM). Spot
platinum has risen almost 20 percent in the past 12 months,
while spot palladium is up more than 100 percent in the same
period.

Through Gold Wheaton’s 50 percent royalty stream from
Quadra’s Sudbury, Ontario, footwall deposit, Franco-Nevada will
increase its exposure to PGM metals to almost 20 percent of
revenues from 10 percent.

“Its a very significant growth of what we believe is a very
highly valued stream,” Harquail said. “We think it’s a very
unique portfolio in the world.”

Franco-Nevada will also acquire a 25 percent gold royalty
stream from First Uranium’s (FIU.TO: ) Mine Waste Solutions
tailings project and a 7 percent gold stream from its Ezulwini
mine.

Overall, the company said its portfolio after the deal goes
through will be made up of 86 percent precious metals.

Franco-Nevada added that it will “maintain at least a 70
percent precious metals component”, but that the company now
has the flexibility to expand through non-precious metal deals,
with oil and gas seen as a future growth area.

Franco-Nevada is being advised on its bid by BMO Capital
Markets, while Gold Wheaton’s advisor is Paradigm Capital
Markets.

The deal has been approved by the boards of both companies
and is subject to the usual regulatory approvals. It is
expected to close in March 2011.

($1=$1.00 Canadian)
(Editing by Janet Guttsman and Peter Galloway)

UPDATE 3-Franco-Nevada bids C$830 million for Gold Wheaton