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  5. KL: Do you think there would be a counter proposal at a higher price for Kirkland Lake if the merger is rejected? [Kirkland Lake Gold Ltd.]
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Q: Do you think there would be a counter proposal at a higher price for Kirkland Lake if the merger is rejected? Or do you think the share price for KL will decline if the merger is rejected and there wouldn’t be a counter proposal?

Asked by Steven on October 13, 2021
5i Research Answer:

KL shares fell sharply on the deal announcement, and are only back to pre-announcement levels now. We doubt then that shares would fall much if the deal is rejected. Right now investors are a bit unhappy, and a new share exchange ratio is certainly one possibility to get the deal done. But it is early days, and the deal makes sense from a corporate viewpoint. The two companies have a sales job ahead of them to convince shareholders of the merits of the deal. We would say there is a small chance of a deal adjustment, perhaps 25% possibility. But the boards have approved the deal and will look bad if the premium changes a lot.