Thursday, October 23rd11.0°C
23711
22952

Goldcorp offering to buy Osisko

Goldcorp Inc. (TSX:G) made an unsolicited $2.6-billion takeover offer for Osisko Mining Corp. (TSX:OSK) and its Canadian Malartic mine in northern Quebec on Monday.

The offer sent Osisko shares soaring more than 20 per cent or $1.07 to close at $6.24 on the Toronto Stock Exchange, well above the offer price as investors speculated that a rival bid might be made.

John Ing, president and chief executive of investment firm Maison Placements Canada, said Goldcorp will likely have to sweeten the offer if it wants to close the deal or face a rival.

"The reality is it's a miserly bid," Ing said, referring to the 15 per cent premium to Osisko's closing share price before the offer by Goldcorp.

Goldcorp chief executive Chuck Jeannes said Canadian Malartic would rank among Goldcorp's best mines if the deal were successful.

"Our strategy has never been about size, it's been about getting better and delivering disciplined and sustainable growth," Jeannes told a conference call with financial analysts.

He said Goldcorp's own Eleonore project in northern Quebec is due to begin production later this year and the acquisition of Osisko would provide an opportunity for some cost savings.

However, Jeannes was cagey about whether Goldcorp would be willing to raise its offer if needed to make the takeover happen.

"We've shown a history of being disciplined in these sorts of things and we have a view of the value proposition and we're going to stick to it. That's all I can tell you at this point," he said.

Gold stocks were beaten down last year as the price of bullion fell from its record highs and Osisko was no exception.

The stock has traded at a fraction of its highs of more than $15 reached in 2010. Osisko shares ended last week at $5.17 per share.

Vancouver-based Goldcorp is offering a combination of stock and cash that it values at $5.95 per share — about 15 per cent above Friday's closing price.

Under the offer, Osisko shareholders will be entitled to receive 0.146 of a Goldcorp common share plus C$2.26 in cash per share. The offer is being made directly to shareholders.

Osisko issued a brief statement after markets closed saying it was aware of the Goldcorp bid but that "no formal offer has yet been commenced."

"The board of directors of Osisko will consider this announcement as well as any formal offer actually made," it said. "Until the corporation completes its review, it will not comment further or speculate as to any future course of action it might take."

Goldcorp and Osisko are not strangers to each other.

The companies have had ongoing talks over the past few years, but those discussions stopped late last year.

Goldcorp sold its 10.1 per cent stake in Osisko in 2011 for $13.75 per share for a total of about $530 million.

Jeannes said the decision to sell the stake was based on valuation.

"Based on the way the market was acting, we saw value in selling them," he said Monday.

"From our perspective it has always been just about adding value and these prices and this point in the development of the company and the asset, we see a value proposition for not only our shareholders but Osisko's as well."

The acquisition of a company with assets in Canada follows a trouble filled year for miners with operations scattered around the globe.

Goldcorp took a hit last year from a writedown at its Penasquito mine in Mexico following a ruling by an agrarian court regarding a land rights dispute that nullified a lease on 600 hectares of land at the project.

The company also suspended exploration and deferred certain development plans at its Cerro Negro project in Argentina amid permitting delays, an unsustainable foreign exchange rate and uncertainty with respect to provincial taxation demands.

In addition to Canadian Malarctic in Quebec's Abitibi gold belt, Osisko owns the Hammond Reef gold project near Thunder Bay, Ont., and land holdings near Kirkland Lake, Ont.

Goldcorp shares closed down 25 cents at $25.04.

The Canadian Press

COMMENTS WELCOME

Comments on this story are pre-moderated and approval times may vary. Before they appear, comments are reviewed by moderators to ensure they meet our submission guidelines. Keep it clean, keep it civil, keep it truthful, stay on topic and be responsible. Comments are open and welcome for three days after the story is published. We reserve the right to close comments before then. Comments that appear on the site are not the opinion of Castanet, but only of the comment writer.



Read more Business News




Recent Trending




Today's Market
S&P TSX14493.12+181.05
S&P CDNX808.780.78
DJIA16680.15218.83
Nasdaq4454.813+71.966
S&P 5001951.26+24.15
CDN Dollar0.8906+0.0011
Gold1231.70-13.80
Oil81.69+1.56
Lumber330.40+1.70
Natural Gas3.644-0.015

 
Okanagan Companies
Pacific Safety0.105-0.015
Knighthawk0.01-0.005
QHR Technologies Inc1.16+0.01
Cantex0.065+0.01
Anavex Life Sciences0.1980.00
Metalex Ventures0.04-0.01
Russel Metals33.10+0.57
Copper Mountain Mining2.08-0.02
Colorado Resources0.14-0.005
ReliaBrand Inc0.013+0.001
Sunrise Resources Ltd0.05-0.01
Mission Ready Services0.41+0.005

 





FEATURED Property
2101408950/952 Mitchell Road
7 bedrooms 4 baths
$529,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Weakening global growth worries

The Big Picture Growth worries persist Worries about weakening global growth and its potential impact on the US economic recovery roiled markets around the globe this week. Europe continues to be the ...


Keep it rubber side down

This time of year, I always worry about which friends of mine will get caught going off the road in adverse weather conditions. With a little preparation most accidents can be avoided. Having won the...


Big bank predicts rate hike

Photo: Thinkstock.comThe end of record-low rates is nigh, according to one major bank, which has taken a stance and predicted when the Bank of Canada will raise its long-standing overnight rate. &ldq...

_








Member of BC Press Council


23741