Goldcorp announces hostile CAD$2.6 bil. bid for Osisko
January 15, 2014, 12:05 am TWN
OTTAWA--Canadian mining giant Goldcorp on Monday proposed one of the biggest mining sector deals in more than a year in announcing a CAD$2.6 billion (US$2.4 billion) hostile bid for Quebec's Osisko Mining.
The offer of 0.146 Goldcorp shares plus CAD$2.26 in cash for each Osisko common share (a total value of CAD$5.95) is a 15 percent premium over Osisko's closing price Friday, Goldcorp said in a statement.
But analysts pointed to Osisko's soaring stock price in morning trading, up nearly 20 percent to CAD$6.18, to suggest the offer is inadequate.
Dan Rollins, an analyst with the Royal Bank of Canada, said Goldcorp will have to sweeten it, or risk losing Osisko to a competitor or “white knight” with a higher bid.
The proposed deal comes as gold companies are struggling to cut costs to stay afloat after bullion prices fell more than 35 percent from record highs. Most others have suspended projects or put off acquisitions.
Vancouver-based Goldcorp is Canada's second largest gold company, after Barrick, with a dozen mines operating in the Americas and several more in development, including its Ilionore mine in Quebec province, which is slated to start production later this year.
Osisko's main asset and only operating mine is the Malartic gold mine in the Abitibi region in northwestern Quebec, which started production in 2011.
Over its 16-year lifespan the Malartic mine is expected to turn out 500,000 to 600,000 ounces of gold per year, according to Osisko.