MAG Silver (NYSE: MAG) shares surged 8.45% in pre-market trading on Monday following the announcement of a $2.1 billion acquisition offer from Pan American Silver (NYSE: PAAS). The deal, which combines cash and stock, values MAG Silver at $20.54 per share, representing a significant premium over its previous closing price.

According to the terms of the agreement, MAG Silver shareholders can choose to receive either $20.54 in cash, 0.755 Pan American shares, or a combination of both for each MAG Silver share they own. The total consideration consists of $500 million in cash and the remainder in Pan American stock. This offer translates to a 21% premium compared to MAG Silver's closing price on Friday.

The acquisition is expected to strengthen Pan American Silver's portfolio, particularly through the addition of MAG Silver's 44% joint venture interest in the Juanicipio mine in Mexico. The deal is subject to approval by two-thirds of MAG Silver shareholders at a special meeting anticipated in July, as well as clearance under Mexican antitrust laws. If all conditions are met, the transaction is projected to close in the second half of 2025, resulting in MAG Silver shareholders owning approximately 14% of the combined company.