Shares of Fortuna Silver Mines (NYSE: FSM) fell as much as 15% when the opening bell rang on Monday. The company -- a precious metals miner based in Canada with mines in Mexico, Peru, and Argentina -- announced before the market opened that it was making an acquisition. Investors often sell the buyer, given that there are costs involved when one company acquires another, and that's exactly what happened here.
Fortuna is buying fellow Canadian precious metals miner Roxgold in a stock and cash deal. Roxgold shareholders will receive 0.283 shares of Fortuna for each share of Roxgold they own. In addition, each Roxgold share will bring a cash payment of $0.001 in Canadian currency (it's obviously mostly a stock deal).
Based on the closing prices of Fortuna and Roxgold prior the deal's announcement, that represents about a 40% premium. Roxgold's stock rose in early trading, as you might expect. That said, after the drop in Fortuna's share price, that premium is a bit smaller at this point, with the two stocks now likely to trade in tandem in the future because of the stock component involved here.
For further details see:
Why Fortuna Silver Mines Stock Tanked 15% Early Today