Boston, MA 04/04/2014 (wallstreetpr) – Yamana Gold Inc. (USA) (NYSE:AUY) is set to bid for Osisko Mining Corp. This bid comes a week after Goldcorp Inc. (USA) (NYSE:GG)’s Chairman Ian Telfer was reported to have stated that he didn’t see any other entity entering into the fray for thwarting his company’s USD 2.47 billion hostile bidfor Osisko.
Yamana has offered CAD 1.47 billion for a 50 percent stake in Osisko’s assets, thus valuing Osisko at almost 7.6% premium over Goldcorp’s bid of CAD 2.7 billion.
What are they fighting for?
Yamana Gold Inc. (USA) (NYSE:AUY) and Goldcorp are mining companies looking to take advantage of a recent slump in prices of the yellow metal to acquire profitable operations of companies like Osisko. Osisko’s main asset is the Canadian Malartic mine in Quebec, which would have figured in Goldcorp’s top mines, had Yamana not queered the pitch.
Goldcorp Inc. (USA) (NYSE:GG)’s confidence stemmed from the fact that many mining companies previously had to write downtheir past takeovers of goldmines, hence not many would be willing to act as suitors for companies like Osisko.
Osisko’s stock has appreciated 7.3 percent to close at CAD 7.38 in Toronto stock exchange. The price is still less than Yamana’s per-share offering of CAD 7.60. However it is a considerable jump over Goldcorp’s bid of CAD 6.29 which used a combination of cash and stock.
The Deal Contours
As per the agreement with Yamana, Osisko would be able to maintain its head office in Montreal, which may mollifycalls for companies to stay in the Francophile region of Quebec. Existing shareholders would receive a combination of cash, Yamana shares and a new set of common shares of Osisko. The deal is approximately a 22 percent uptick over the Goldcorp offer. The deal from Yamana Gold Inc. (USA) (NYSE:AUY) is being backed by participation of two of Canada’s largest pension funds.
The agreement would require Osisko to sell a portion of its future gold from the Canadian Malarticmine to Caisse de Depot et Placement du Quebec. Simultaneously the Canada Pension Plan Investment Board will allow for enhancement of credit facility to Osisko. This agreement would help Osiskoaccess an additional CAD 550 million in funding.