Tags: Goldcorp | Osisko | gold | Montreal

Goldcorp Increases Hostile Bid for Osisko to $3.3 Billion

Thursday, 10 April 2014 09:55 AM

Goldcorp Inc., the world’s second-biggest gold miner by market value, raised its hostile bid for Canada’s Osisko Mining Corp. to about C$3.6 billion ($3.3 billion) to trump a competing offer by Yamana Gold Inc.

Goldcorp said today in a statement it will pay C$7.65 in cash and stock for each Osisko share. That’s about 19 percent more than its initial bid made in January. Yamana agreed April 2 to acquire a 50 percent stake in Osisko’s mining and exploration assets in a deal that it said valued the whole company at C$7.60 a share.

The fight for Osisko follows last year’s slump in gold prices that dragged down the valuation of producers and created an opportunity for companies looking to add mines to replenish their reserves. Yamana and Vancouver-based Goldcorp covet Osisko’s main asset, the Canadian Malartic operation. Goldcorp Chief Executive Officer Chuck Jeannes has said he would rank the Quebec project among his company’s top mines based on free cash flow, output and net asset value.

Goldcorp was granted access to complete due diligence on Montreal-based Osisko as part of a settlement of a lawsuit in which Osisko tried to block the offer.

“The recent completion of our due diligence process has confirmed the technical and financial merits of our decision to acquire Osisko,” Jeannes said in today’s statement.

Osisko rose 2.4 percent to C$7.73 at 8:23 a.m. in Toronto while Goldcorp climbed 0.6 percent to C$28.

Goldcorp said its latest offer comprises 0.17 of a Goldcorp share plus C$2.92 in cash for each Osisko share. The revised bid will expire April 22 and the minimum tender requirement is now 50.1 percent of Osisko’s shares.

Montreal Office

Osisko rejected Goldcorp’s initial offer as too low. CEO Sean Roosen said today that while his company will review the higher bid, Goldcorp’s proposal still wouldn’t give Osisko shareholders a direct stake in Canadian Malartic, unlike the Yamana deal.

“This bid highlights the fact that there is a lot of value left on the table at Canadian Malartic and we’ll be working with our partner at Yamana to see where they want to go with this,” he said in a telephone interview. If Goldcorp wants “to take the potency of Canadian Malartic directly away from the shareholders, I think they’re going to have to do better than match the bid.”

Under the accord with Yamana, the fourth-largest Canadian gold miner by sales, Osisko will keep its head office in Montreal and sell a portion of its future gold from Canadian Malartic to Caisse de Depot et Placement du Quebec, a pension fund. Osisko also agreed with the Canada Pension Plan Investment Board to increase a credit facility. The accords with the two pension funds will provide it with an additional C$550 million in funding.

Deal Advisers

GMP Securities LP and Scotiabank are Goldcorp’s financial advisers on the bid while its legal advisers are Cassels Brock & Blackwell LLP, Neal Gerber & Eisenberg LLP and Gowling Lafleur Henderson LLP, according to data compiled by Bloomberg.

BMO Capital Markets is Osisko’s financial adviser and its legal counsel is Bennett Jones LLP and Skadden, Arps, Slate, Meagher & Flom LLP, the data show.

Barrick Gold Corp. is the world’s largest gold producer.

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Goldcorp Inc., the world's second-biggest gold miner by market value, raised its hostile bid for Canada's Osisko Mining Corp. to about C$3.6 billion ($3.3 billion) to trump a competing offer by Yamana Gold Inc.
Goldcorp, Osisko, gold, Montreal
Thursday, 10 April 2014 09:55 AM
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