Friday, April 18th12.1°C
19345
20725

Goldcorp will have to raise bid to win Osisko Mining, analysts say

TORONTO - Goldcorp Inc. (TSX:G) will have to raise its bid if it expects to be successful in its unsolicited takeover offer for Osisko Mining Corp. (TSX:OSK), analysts say.

RBC Capital Markets analyst Dan Rollins suggests that Montreal-based Osisko will negotiate an improved offer in the range of $6.50 to $7 per share — compared with Goldcorp's offer worth about $5.95.

"We believe Goldcorp's offer is a shot across the bow in order to bring Osisko to the table to negotiate a friendly transaction or bring a superior proposal to investors," Rollins wrote in a note to clients.

Shares in Osisko shot up well above Goldcorp's offer price after the big gold miner announced Monday that it's offering cash and stock that value Osisko at about $2.6 billion.

Under the terms of the bid, Osisko shareholders would receive 0.146 of a Goldcorp share and $2.26 in cash per Osisko share. Because of the share component of the offer, its value will fluctuate over time.

Goldcorp shares closed down 70 cents Tuesday at $24.34. The stock had been worth $25.29, before the takeover play was announced.

Osisko shares closed down a penny at $6.23 in trading on the Toronto Stock Exchange on Tuesday. They closed on Jan. 10, before the Goldcorp's announcement, at $5.17.

For its part, Osisko its board will review Goldcorp's offer, but made no further comment.

Goldcorp was once one of the largest shareholders in Osisko, but sold its 10.1 per cent stake in the company in 2011 for $13.75 per share for a total of about $530 million.

Chuck Jeannes, Goldcorp's president and chief executive, said Monday that the companies had been in regular discussions up until late last year.

CIBC analyst Alec Kodatsky noted the financing Goldcorp has arranged for its offer could allow the gold miner to raise its offer by about 57 cents per share for an implied bid of $6.52 per share.

"We see the announcement . . . as initiating the process of price discovery and start the discussions to understand where Osisko shareholders have established expectations," Kodatsky wrote.

"It would seem that Goldcorp is comfortable in taking this dialogue directly to shareholders."

Rollins suggested it may be difficult for Osisko to find a rival bidder to compete with Goldcorp's offer.

"Given Goldcorp's premium valuation within its share price and cash on hand relative to a majority of its peers, we believe it could be difficult for Osisko to find a white knight," Rollins wrote.

"That being said, one cannot rule out the potential for a white knight, including potential for private equity money to support a competing bid from another gold producer."

Shares in gold companies were beaten down last year as the price of gold fell from its record highs.

Osisko shares fell more than 30 per cent in 2013 even as it ramped up operations at its Canadian Malartic gold mine in northern Quebec.

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

The Canadian Press


Read more Business News

20820


Recent Trending




Today's Market
S&P TSX14500.39+53.87
S&P CDNX998.770.80
DJIA16408.54-16.31
Nasdaq4095.516+9.291
S&P 5001864.85+2.54
CDN Dollar0.9072-0.0012
Gold1293.80-9.2999
Oil104.59+0.83
Lumber326.10-2.70
Natural Gas4.735+0.205

 
Okanagan Companies
Pacific Safety0.115+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.29+0.07
Cantex0.055+0.01
Anavex Life Sciences0.3750.00
Metalex Ventures0.08+0.005
Russel Metals30.66+0.11
Copper Mountain Mining2.35-0.07
Colorado Resources0.255-0.01
ReliaBrand Inc0.12-0.01
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.25+0.02

 
19691


21115

FEATURED Property
1855335126 - 1120 Guisachan Road
2 bedrooms 2 baths
$295,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Learning to flirt with the edge

With all of the adventure activities I have done and still do, I wonder sometimes if the edge still exists. The systematic approach to learning a new adventure or extreme activity combined with the r...


Time spent prospecting

How much time should you put into prospecting? The question is a bit of a puzzle. Ideally, there would be a reference book that lists, by industry, how much time you should invest in prospecting acti...


Valuation fears grip markets

The Big Picture Valuation fears grip markets Growing concerns about the level of stock market valuations sparked a risk-off trade in global markets this week. Investors are worried that many companies...

_



21368

21368


Member of BC Press Council


21188