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Value-added Wood Products to Find New Market Opportunities

Apr 15, 2014

Against expectations, Goldcorp (TSE:G)(NYSE:GG) sweetened its hostile bid for Osisko Mining Corp. on April 10 (TSE:OSK) to $3.6 billion, trumping a friendly proposal by Yamana Gold Inc (TSX:YRI)(NYSE:AUY).

Goldcorp raised its hostile offer to $7.65 per share from about $6.30.

The miner, which, at $21.5 billion, is the world’s second most valuable gold miner after Barrick Gold, is primarily after Osisko’s low-cost Canadian Malartic gold mine in Quebec.

The week before Osisko unveiled a complex “white knight” bid by Canadian miner Yamana Gold for 50% of its assets, valuing Osisko at about $3.3 billion, or $7.60 per share.

Investment site Motley Fool argues “if investors were to favour any deal they would most likely go with Goldcorp’s offer as it has a few advantages:

  • Goldcorp’s offer is simple and straightforward;
  • Yamana’s general partnership agreement involves restructuring of debt and precious metal stream with a repurchase option; and
  • Goldcorp’s offer does not require a formal shareholder approval and has an earlier closing date.

Kitco reports a research note by Canadian bank CIBC also believe the Goldcorp bid could be viewed more favourably by investors, even though the new bid is only slightly higher than the value of the Yamana partnership.

“We believe the acquisition, if successful, offers meaningful low-risk production growth at acceptable costs to Goldcorp. Given Goldcorp’s current cash and available credit on hand, we believe Goldcorp has the financial capability to complete the transaction by the end of April,” Kitco said.

“Goldcorp’s increased offer represents straightforward and superior value to Osisko shareholders,” said chief executive officer Chuck Jeannes after announcing the improved offer, adding it also ensures “accretion on key per-share metrics for Goldcorp shareholders.”



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