Cornucopia halts merger plan, Galactic holds talks with DCC

The proposed merger of Galactic Resources (TSE) and Cornucopia Resources (TSE) into one company has been terminated.

Galactic said the cancellation of the merger was “amicable” and will not affect the companies’ Ivanhoe joint venture gold project in Nevada.

The merger, originally proposed over a year ago, was renegotiated a number of times. Earlier this year the exchange ratio was reset at 0.7 Galactic shares for each Cornucopia share.

The deal was subject to Galactic completing financings totalling US$9.1 million. Galactic missed a May 31 deadline to raise US$4.5 million of the funds but received an extension to the end of June. Although the merger is off, the company is proceeding with a private placement already in progress.

Peter Guest, president of Galactic, said the merger was terminated at Cornucopia’s request. But he added that he was pleased with the development since the company can now concentrate on working out a business combination with DCC Equities.

Galactic recently announced it is in discussions with DCC Equities concerning a possible business combination.

DCC, 51.6% owned by Dundee Capital, is a private merchant banking firm with what Galactic described as “substantial investments in the resource sector.”

Guest noted that a merger with DCC would benefit both companies. A deal would give DCC a public trading vehicle and Galactic would benefit from DCC’s financial resources.

Guest said the companies are in preliminary discussions on how to structure a deal. He said DCC has a number of real estate and industrial holdings which would likely be left out of any deal the two companies make. When questioned on the relative size of DCC’s resource assets to those of Galactic, Guest estimated that the two would be about equal.

Ned Goodman holds a large shareholding in Dundee and with his knack for forging complicated deals, ongoing developments will be watched with interest.