Sprott Inc. (TSX: SII), a precious metal and real asset management, has entered into an agreement with Central Fund of Canada Limited (CFCL) (NYSE MKT: CEF; TSX: CEF.A), CFCL’s administrator, and the controlling shareholders of CFCL and the administrator, to acquire the common shares of CFCL and the right to administer and manage CFCL’s assets.
Upon completion of the transaction, all CFCL Class A shares to be exchanged for units in a new Sprott Physical Gold and Silver Trust to be managed by Sprott Asset Management (SAM).
Sprott will acquire the common shares of CFCL and the right to administer and manage CFCL’s assets for an aggregate amount of $105 million in cash and $15 million of Sprott common shares.
Central Fund of Canada Limited is controlled by the family of J.C. Stefan Spicer which owns CFCL’s common shares.
Spicer family will also receive a one-time, performance-based cash payment of at least $5 million on the first anniversary of the closing of the transaction.
“This transaction reinforces Sprott’s global leadership in precious metals, doubling our physical bullion holdings to more than C$8.5 billion and building our total AUM to approximately C$11.5 billion,” said Peter Grosskopf, CEO of Sprott. “Importantly, it demonstrates how we’re executing on our strategy of increasing our precious metals and real assets exposure to meet growing investor interest in the sector.”
“With this transaction, we will add another best-in-class precious metals vehicle to our product lineup, also featuring our industry-leading physical redemption feature, while materially increasing our revenue from this business line,” said John Ciampaglia, Senior Managing Director of Sprott and CEO of SAM. “Based on the historical trading of SAM-managed physical bullion trusts at or near the value of the metal that underlies them, we expect to unlock approximately US$300 million in value for CFCL’s class A shareholders.”
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