Alamos Gold, in form, will be the Targer in a merger-of-equals between it and AuRico Gold

It is proposed that AuRico will acquire all the shares of Alamos in consideration for AuRico common shares and nominal cash (so that a s. 85 election is required for rollover treatment), and then amalgamate with Alamos.  Former AuRico and Alamos Shareholders are anticipated to own 50.1% and 49.9% of Amalco, respectively.  95.1% of the shares of a newly-incorporated subsidiary, namely, AuRico Metals, holding a B.C. development project, cash and royalty interests, will be spun-off to all the Amalco shareholders under a s. 86 reorg involving an exchange of Amalco common shares for Amalco Class A shares (with identical substantive attributes) and common shares of AuRico Metals.  The AuRico Metals distribution will be treated as a dividend for Code purposes based on current or accumulated earnings and profits of Amalco; and the merger is intended to qualify as a Code s. 368(a) reorg for both AuRico and Alamos shareholders – except that those who acquired their Alamos shares before 2006 (when Alamos ceased to be a PFIC) will be subject to the PFIC rules.

It is not clear what role the relative paid-up capital of the Alamos and AuRico shares or the acquisition-of-control rules played in the decision to have Alamos, in form, be the Target.  An acquisition of control of AuRico (which likely has significant Canadian resource pools) by Alamos under ITA s. 256(7)(c) will be avoided by having the AuRico Metals spin-off occur after the merger.  The U.S. treatment of the spin-of likely would not be different if it had occurred before the merger nor would such ordering likely affect the qualification of the merger as a s. 368(a) reorg.

Neal Armstrong and Abe Leitner.  Summary of AuRico/Alamos Circular under Mergers & Acquisitions – Mergers – Shares for Shares and Nominal Cash.