Keegan/PMI "merger of equals" addresses Canadian, Australian and U.S. shareholder issues

Keegan (a B.C. corporation listed on the TSX and NYSE MKT) will be acquiring all the shares of PMI (a B.C. company listed on the TSX and ASX) in consideration for Keegan shares, in what is styled as a merger of equals.  The transaction should produce a rollover for most Canadian and Australian shareholders of PMI.

However, PMI is a PFIC, as will Keegan (renamed Asanko) after the merger.  Although not directly disclosed, it may be that the transaction was structured as an acquisition by Keegan rather than the reverse in order to minimize adverse consequences to the U.S. shareholders of Keegan on the merger itself.

In the case of any U.S. shareholders of PMI, a proposed Code regulation respecting PFIC-for-PFIC exchanges may provide relief.

Neal Armstrong.  Summary of Keegan/PMI Joint Circular under Mergers - Share-for-Share.