Goldcorp (TSX: G; NYSE: GG) is bowing out of the race for Osisko Mining (TSX: OSK; US-OTC: OSKFF) by not amending its $3.6-billion hostile takeover offer for the junior producer and its large Canadian Malartic gold mine in Quebec.
After several unsolicited advances, with the first one made public in January, the senior gold miner allowed its last offer — which fell short of the friendly, joint $3.9-billion bid from Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Yamana Gold (TSX: YRI; NYSE: AUY) — to expire on April 22.
“We stated from the beginning of this process that we would remain disciplined with respect to our offer to acquire Osisko, and our decision not to amend the offer is consistent with that commitment,” Goldcorp’s CEO Chuck Jeannes said in a statement.
Osisko’s board was likely relieved by the news — they were against Goldcorp’s advances from the start. Some analysts saw Goldcorp’s decision to throw in the towel as positive, noting a higher bid for Osisko would have diluted the company’s shares.
Cowen and Co. analyst Adam Graf says the latest move leaves Goldcorp with a “clean slate” to seek out other merger and acquisition opportunities and “value-accretive” propositions.
While Goldcorp already has near-term growth, the analyst predicts the company may need to tap into other growth opportunities after 2015. Graf suggests three potential juniors that may be “good fits” for Goldcorp. They include Pretium Resources (TSX: PVG; NYSE; PVG), which expects to put its high-grade Brucejack gold project in B.C. into production in 2016; Premier Gold Mines (TSX: PG; US-OTC: PIRGF), where Goldcorp owns 51% of the junior’s Red Lake properties in Ontario; and Gold Canyon Resources (TSXV: GCU), which is exploring the Springpole open-pit gold project in Ontario.
Goldcorp’s withdrawal means Agnico and Yamana are the top bidders for Osisko, and could soon both own 50% of the large Canadian Malartic mine, expected to churn out 600,000 oz. gold a year for at least 14 more years.
Under their combined proposal, the mid-tier producers would jointly operate Canadian Malartic and develop Osisko’s other gold projects in Ontario and Quebec. They would spin out the junior’s Mexican assets into a new company that Osisko’s management would run. Osisko’s shareholders are set to vote on the offer in May.
On the news Goldcorp was quitting its pursuit, Goldcorp shares gained 2%, or 52¢, to close April 21 at $26.53, on 3.9 million shares traded.