On Wednesday, silver and gold miner Coeur d' Alene (NYSE:CDE) announced that it has submitted a binding proposal to acquire all outstanding shares of Orko Silver (UNKNOWN:OKOFF.DL) for a total transaction value of $383.3 million. In response, Orko's board of directors voted unanimously to declare Coeur's bid a "superior proposal" to the bid it had already received from First Majestic Silver (NYSE:AG).

What this means right now is that a clock has begun ticking. First Majestic has five business days -- until 11:59 p.m. PT on Feb. 19 -- to increase its bid and match Coeur's offer price, or else allow Orko to terminate the companies' merger agreement and go with Coeur instead.

In the latter event, Orko shareholders will be able to trade each Orko share they own for:

  • 0.0815 common shares of Coeur and 0.01118 warrants to purchase shares of Coeur (exercisable at a common share strike price of $30), plus $0.70 cash.
  • Or 0.1118 common shares of Coeur and 0.01118 warrants (although if too many Orko shareholders opt to be paid in Coeur shares, some shareholders may have to take some cash instead).
  • Or $2.60 in cash and 0.01118 warrants -- this time subject to the caveat that if too many Orko shareholders opt to be paid in cash, some may have to accept Coeur shares instead.

Coeur says that based on the Feb. 12 closing prices of all three companies involved in this equity triangle, its offer values Orko shares at approximately $2.70 apiece, and 25% more than what First Majestic has so far offered to pay.

So far, First Majestic has issued to response to Coeur's offer. Investors have weighed in, though, bidding down Coeur shares 10.3% Wednesday, bidding up First Majestic shares by 1.2%, and sending Orko Silver up a whopping 21.8% -- albeit only to $2.60 a share, or below what Coeur says its offer is worth.