(Refiles to correct figure in headline to Canadian dollars from U.S. dollars)
* To issue 20 million shares as consideration
* Deal to add to earnings immediately
* Rick Rule to join executive team
* Deal to boost assets under management by $500 million (Adds comments)
TORONTO, Sept 22 (Reuters) - Canadian fund manager Sprott Inc (SII.TO) said on Wednesday it has entered into an all-stock deal to acquire three U.S.-based resource investment companies as it drives to expand its brand.
Toronto-based Sprott said it has signed a letter of intent to buy the companies -- Global Resource Investments, Terra Resource Investment Management and Resource Capital Investments -- for 20 million shares, valuing the deal at C$90 million ($87.89 million).
Shares of Sprott have risen 27 percent in the last 30 days and were up 7.8 percent at C$4.85 late on Wednesday morning on the Toronto Stock Exchange.
The Global group of companies that Sprott is buying are led by Rick Rule, a U.S.-based investor specializing in mining and energy. Rule will join Sprott’s executive team and will be nominated to the board.
The acquisition - expected to close near the end of the year - marks the first step by the company to expand its global presence since Peter Grosskopf took the helm and predicted the firm could double in size in five years.
By adding Global, an asset manager and a broker/dealer, Sprott hopes to raise its profile in the United States, where it sees strong growth in resource investing.
“We’ve got a recognized brand, but our brand has not been sold into the U.S., it’s not been sold to U.S. investors,” Grosskopf said on a conference call held to discuss the deal. “We think that with the performance coming our way this year, with the themes that we’re on right now, and with Global’s help, we we can get a lot of traction in the U.S. market.”
Specifically, the company hopes to take advantage of growing demand for resource-related investing and the relatively scarce expertise in the area in the United States, where the potential customer base dwarfs the Canadian market.
Sprott said the deal would add to its earnings immediately and increase its assets under management by $500 million and overall assets under administration by $850 million.
Sprott will issue an additional 8 million shares in five years on completion of certain financial performance targets.
“I think this is something that can cause us to accentuate our development in the whole North American market,” said Eric Sprott, the firm’s founder who ceded the chief executive post earlier this year.
$1=$1.03 Canadian Reporting by Jochelle Mendonca in Bangalore, additional reporting by Pav Jordan in Toronto; Editing by Vyas Mohan and Peter Galloway