Editorial: Where egos fly

Remember the films from high school health class that told us that “no means no?” Well, it seems not everyone was paying attention. In this case, Bobby, the popular, handsome and overly aggressive star quarterback, is being portrayed by Idaho-based silver miner Coeur d’Alene Mines; the innocent, protesting sophomore, by Wheaton River Minerals.

At the best of times takeovers and mergers are surely no small tasks; double the degree of difficulty when one side declines to tango. Despite steadfastly spurning Coeur’s advances from the get-go, Wheaton still finds itself a target of unrequited affection.

We understand that the business world plays by Darwin’s rules, but when is enough, enough? Is it when shareholders begin to suffer through the peaks and troughs of their respective companies’ share price as the battle rages? Since Coeur launched its hostile bid in late May, its shares have seen just short of a third of their value trimmed away; for their part, Wheaton’s shares have slipped by about 15%.

Perhaps the white flag should only be unfurled when all hope is lost. Coeur says it is committed to its bid, but is it justified? The company’s last offer, which was subsequently scrapped for a newer, cross-border version, netted less than 1% of Wheaton’s outstanding shares, hardly a ringing endorsement.

And, can chasing a clearly unwilling target be considered advisable when the chase becomes a distraction from one’s own business? Maybe Coeur’s eyes were off the ball when accounting errors forced the recent restatement of some financial results. That snafu was followed by the termination of the company’s chief accountant.

Coeur’s bid has also cost it real dollars, US$2 million up to August to be exact. That payout has still not provided any fruit, and the prospects aren’t looking too good. That’s US$2 million out of the pocket of a company that has recently been a consistent loss-maker; maybe its energies would be better directed elsewhere. One can hardly blame Wheaton for more than a little trepidation when considering a potential union without the prospect of a prenuptial agreement.

Still, it’s unfair to be too hard on Coeur, after all, it believes it’s made a fair bid, and there has yet to emerge a competing bid or white knight riding to Wheaton’s rescue. The best Wheaton has been able to come up with is a plan to split off its silver assets into a majority-owned subsidiary. The plan can either be seen as an attempt to trip up Coeur’s bid, or as a packaging of Wheaton’s silver for possible sacrifice to Coeur.

Certainly there’s an ego component to the fight as well; who wants to be the one to turn tail and run? The fight has also taken on a personal aspect lately, with management skills being called into question. It has provided some entertaining moments, most notably when Wheaton’s chief executive Ian Telfer offered up the office number for Coeur d’Alene boss Dennis Wheeler. At least one Wheaton shareholder managed to confront Wheeler on what he described as a “parasitic bid that is holding back the price of Wheaton shares.”

As it stands, both sides have their heels dug in, but at least there’s some light at the end of the tunnel, with each company’s shareholders set to vote on the offer at the end of September. Ultimately, Coeur has agreed to abandon its bid if it isn’t successful by Oct. 15, the newly delayed date of Wheaton’s planned silver spinoff.

While the ongoing war may provide for juicy news copy, the sniping and mud racking are hardly healthy in an era of widespread corporate shenanigans and the still lagging shadow of Bre-X. If this is how the two sides are getting along now, what would relations look like after a marriage?



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