Analyst Actions: Eldorado Bid for European Goldfields Prompts Downgrade
Eldorado Gold Corp. (ELD.TO) announced during the weekend that it had agreed to pay $2.5 billion for European Goldfields (EGU.TO), the owner of two undeveloped Greek gold projects, according to The Globe and Mail.
The Globe report said a key concern, no doubt, is that Greece is at the epicentre of the global economic turmoil and is facing considerable social unrest and political uncertainty. It's not exactly a risk-free mining acquisition.
While feeling neutral on the all-stock bid, CIBC World Markets Inc. analyst Barry Cooper said in a research note today that he thinks these concerns are going to linger for some time and limit upside for the stock. Mr. Cooper noted: "Should the acquisition of EGU be successful, the risk profile of the company will increase with exposure to Greece where taxes and operating terms are likely to fluctuate."
CIBC World Markets downgraded Eldorado to "sector performer" from "sector outperformer" while cutting the price target by US$6 to US$20.
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