Goldcorp (TSX: G; NYSE: GG) has sweetened its hostile takeover bid for Osisko Mining (TSX: OSK; US-OTC: OSKFF) to $7.65 per share, or $3.6 billion, topping a friendly $3.4 billion deal made by Yamana Gold (TSX: YRI; NYSE: AUY).
The senior gold producer is now offering Osisko shareholders 0.17 of its share and $2.92 in cash for each share held, up from its original offer of 0.146 of a Goldcorp share and $2.26 in cash, which valued Osisko at $6.32 per share based on its April 9 close.
Goldcorp’s president and CEO Chuck Jeannes said the company raised its original offer after completing its due diligence on Osisko’s Canadian Malartic mine in Quebec. The major gained access to more information on the prized asset on April 1 after agreeing to hold off on buying Osisko shares until April 15.
Jeannes also highlighted the current offer is “straightforward” and gives Osisko shareholders’ better value, while still being accretive on “key per-share metrics for Goldcorp shareholders.”
The revised bid beats Yamana’s current $7.60-per-share offer for half of Osisko’s mining assets, including the coveted Canadian Malartic mine, plus 95.7 million Yamana shares and $441.5 million in cash. Under this deal, Osisko would also sell a portion of the gold produced from Canadian Malartic at a discount as well as increase its debt.
In a brief release, Osisko said it would review Goldcorp’s new offer, urging its shareholders not take any action until it makes a recommendation.
The junior’s CEO Sean Roosen, who has strongly rejected Goldcorp’s advances since mid-January, told local media that he still prefers the Yamana deal as it provides more benefits, including continued exposure to the Canadian Malartic mine, where Osisko would remain operator under the Yamana partnership.
Desjardins analyst Michael Parkin, who covers Osisko, writes shareholders may like the “simplicity” of the Goldcorp offer. That said, he notes the Yamana partnership “does provide shareholders with a more direct exposure to the high-quality Canadian Malartic mine and may be a reason for some shareholders to prefer the Yamana offer.”
Parkin adds Yamana will need to increase its offer to win the bidding war.
Commenting on the new offer, Cowen and Co. analyst Adam Graf, who covers Goldcorp, says the proposal “appears dilutive.” “We are disappointed that an industry bellwether is still willing to overpay for acquisitions,” he writes.
Goldcorp’s offer requires 50.1% of Osisko shareholders’ to approve the deal, instead of two-thirds of shareholders as required previously. The offer expires on April 22.
Both Osisko and Yamana did not return a request for comments.
On the higher offer, Goldcorp closed April 10 down 3.6% at $26.84, while Osisko stayed relatively flat at $7.58.