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Hecla (HL) makes a $111m all-cash hostile bid for U.S. Silver (USA.to)

This news (main NR here or if you prefer a Reuters gig here) is interesting on several levels. Firstly, a bigger fish in Hecla (HL) with a market cap of around $1.3Bn is making a $1.80/share cash bid (+29% Weds close) for a smaller fish (USA.to) at what looks like the right time for cash bids that add eventual equity value…as long as the market rebounds at least. Secondly, this offer clearly trumps the opportunistic-looking deal with RX Gold & Silver (RXE.v) and offers more value to beaten up/beaten down USA.to holders (disclosure, no personal position at this time but I have held USA.to previously). Thirdly, HL is taking a bit of a corporate gamble here, buying up a high cash cost producer that might not be profitable even now and would certainly start running at a loss if silver dropped just a few dollars more. Fourthly, we now have two sets of management teams fighting over an asset, which means that a bidding war is in the cards on this one. It’s reasonable to assume that $1.80/share is a starting point.
Lastly, I was adding to a personal silver company position just yesterday (note to subbers: the same one I added to the week before) in the belief that sectorwide M&A can’t be too far round the corner. For sure a pity I didn’t pick USA.to as my buy and get the instant win, but this type of action bodes well not just for the back pockets of those long-suffering USA.to shareholders.

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