Friday, November 28th-0.4°C
22246

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




Recent Trending




Today's Market
S&P TSX14787.58-134.86
S&P CDNX742.10-13.30
DJIA17832.995.24
Nasdaq4791.63+4.312
S&P 5002067.92-4.91
CDN Dollar0.8743-0.0075
Gold1166.90-29.70
Oil67.82-5.87
Lumber328.50+0.50
Natural Gas4.295+0.144

 
Okanagan Companies
Pacific Safety0.15-0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.30-0.04
Cantex0.04-0.005
Anavex Life Sciences0.1998+0.0288
Metalex Ventures0.045+0.005
Russel Metals29.93-0.77
Copper Mountain Mining1.96-0.16
Colorado Resources0.130.00
ReliaBrand Inc0.0134-0.0001
Sunrise Resources Ltd0.05+0.005
Mission Ready Services0.320.00

 
24130




FEATURED Property
176338510-3310 Appaloosa Rd
$199,900
more details
image2
Click here to feature your property
Please wait... loading


Don't stop dreaming!

On Wednesday evening I drove through the Bow Valley in Alberta. It is my old home town... the first place Jackie and I moved to in 1988 when we emigrated. We ended up setting up home there and living...


Second marriage issues

It is not unusual that one or both of the parties planning to marry are approaching marriage for the second time. There are pluses and minuses to this new situation. On the plus side, individuals ente...


The last great Canadian tax shelter

A guide to how flow-through fund limited partnerships can mightily aid your tax planning!The end of the year will raise concerns among many professionals, self-employed persons, business owners and ev...

_



24160

24207


Member of BC Press Council


22632