What are the underlying reasons for the change in strategy, and how might this impact the likelihood of the pending Canex takeover completing successfully?

Why Mayfair pulled its bid

Mayfair’s decision to walk away stems from a combination of strategic and financial realities that became evident after the March‑20 announcement.

1. Insufficient shareholder backing – The Discovery Group (Robins, Paterson, Klinck) that had initially lent its name to Mayfair’s proposal now publicly pledged its support to Canex’s own offer on Gold Basin. That shift effectively removed a key source of “friendly” votes that Mayfair was counting on to clear the 50 % shareholder threshold.

2. Financing and timing pressure – Mayfair, a TSXV‑listed SPAC, has a limited cash runway and must raise additional capital to fund a two‑company takeover. With the Discovery Group’s endorsement moving to Canex, the odds of closing a financing round before the statutory deadline dropped sharply, making the bid economically unattractive.

3. Strategic focus – By exiting, Mayfair can conserve its balance sheet for a more straightforward, single‑target acquisition rather than a tangled “double‑up” (Gold Basin + Canex). The market often penalises SPACs that over‑extend, and the –30 sentiment score reflects that skepticism.

Implications for the pending Canex‑Gold Basin deal

The discovery that the same influential shareholders now back Canex dramatically lifts the probability that the Gold Basin transaction will close. Their support gives Canex a ready‑made voting bloc that can push the deal past the 50 % shareholder approval hurdle, and it also signals to institutional lenders that the capital structure will be less contentious. Consequently, the “completion risk premium” on Canex’s stock should compress, and any remaining regulatory or financing snags are now the primary obstacles rather than shareholder opposition.

Trading take‑aways

• Canex (CNX.V) – Expect a short‑to‑mid‑term upside rally as the market re‑prices the higher likelihood of a successful acquisition. The stock is trading near its 20‑day EMA; a break above the recent resistance around CAD 0.45 on volume would be a bullish entry signal. Consider a position with a stop just below the 20‑day EMA (≈ CAD 0.38) to protect against a surprise regulatory setback.

• Gold Basin (GBS.V) – The bid’s credibility boost should lift the share price toward its pre‑announcement high (≈ CAD 0.28). A pull‑back to the 50‑day SMA (≈ CAD 0.22) could offer a lower‑risk entry for investors who want exposure to the upside from a completed merger.

• Risk management – Keep an eye on any new filings with the BC Securities Commission or financing news from Canex’s lenders. A delay in closing or a competing bid would quickly reverse the rally, so a tight stop‑loss or option‑based hedge is prudent.