Proxy Adviser Glass Lewis Recommends Against Eldorado Gold's $3.8 Billion Foran Mining Acquisition
In a significant development for the mining sector, proxy advisory firm Glass Lewis & Co. has recommended that shareholders of Eldorado Gold Corp. vote against the company's proposed $3.8 billion acquisition of Foran Mining Corp. This recommendation represents the latest obstacle for the deal, following earlier opposition from Eldorado's third-largest shareholder, L1 Capital, which called the takeover too expensive.
Conflicting Advisory Opinions Create Uncertainty
Glass Lewis's opposition contrasts sharply with a recommendation from Institutional Shareholder Services (ISS), another prominent proxy advisory firm, which earlier this week urged investors in both companies to support the takeover. According to Glass Lewis's report published Thursday, Eldorado shareholders would receive a smaller stake in the combined company than the value Eldorado is contributing through the stock-and-cash transaction.
The advisory firm expressed particular concern about the valuation, noting that Eldorado would be paying a "relatively high valuation for a single-asset mining firm that is still transitioning to commercial production." Glass Lewis was referring specifically to Foran's McIlvenna Bay project in Saskatchewan, which is scheduled to begin production in the middle of this year.
Market Reaction and Share Price Movements
Following the release of the Glass Lewis report, shares of both companies experienced notable volatility. On Friday, shares in both Vancouver-based companies climbed more than three percent in Toronto trading. This movement followed a 9.7 percent drop in Foran's stock on Thursday, while Eldorado shares closed 3.9 percent lower that same day.
The proposed acquisition, announced in February, is part of a broader wave of mining deals as companies seek to boost output following a sharp rally in metal prices over the past year. Eldorado, which owns projects in Canada and Europe, offered a combination of cash and shares to purchase all of Foran's stock in what was described as a no-premium transaction.
Strategic Rationale and Copper Exposure
The deal would significantly increase Eldorado's exposure to copper through Foran's McIlvenna Bay project in Saskatchewan. According to company projections, the combined entity would be weighted approximately 77 percent toward gold, 15 percent toward copper, and eight percent toward other metals. This strategic move comes as miners worldwide race to secure copper resources amid rising demand driven by the global electrification trend, with quality deposits becoming increasingly difficult to find and more expensive to develop.
While Glass Lewis acknowledged that combining the two portfolios would "meaningfully contribute" to growth and cash flow in coming years, the advisory firm raised concerns about operational complexity. The report specifically noted that Eldorado is already facing delays at its Skouries gold-and-copper project in Greece, suggesting that adding another development project could strain the company's operational capabilities.
Company Response and Shareholder Opposition
In an emailed statement on Friday, Eldorado responded to the Glass Lewis report, asserting that the advisory firm's assessment "does not fully reflect the deal's long-term strategic and economic merits" nor the "significant value creation opportunity" it would deliver for Eldorado shareholders. Representatives for Foran did not immediately respond to requests for comment regarding the Glass Lewis recommendation.
The Glass Lewis report follows a letter sent by L1 Capital, Eldorado's third-largest shareholder, to the company's board on March 21. In the letter, L1 Capital requested that Eldorado terminate the proposed deal and stated that if the company proceeds with the acquisition, the firm would vote against it at the shareholder meeting scheduled for April 7.
The conflicting recommendations from major proxy advisory firms and shareholder opposition create significant uncertainty around the proposed acquisition, which was positioned as a strategic move to capitalize on growing copper demand while expanding Eldorado's North American presence. The outcome of the April 7 shareholder vote will determine whether this major mining consolidation proceeds as planned.
