This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Goldcorp (GG) Makes Hostile Takeover Intentions Official

NEW YORK (TheStreet) -- A day after announcing it would make a hostile bid for Osisko Mining, Goldcorp (GG - Get Report) has made its intentions official. On Tuesday, the gold producer confirmed it had commenced its formal offer to acquire Osisko Mining Corporation by filing required documents with Canadian securities regulators and the U.S. Securities and Exchange Commission.

Goldcorp intends to purchase all outstanding common shares in a cash-and-shares deal worth C$2.6 billion. As part of the offer, Osisko shareholders will receive 0.146 of a Goldcorp share and C$2.26 in cash per holding. The offer to Osisko shareholders is equal to approximately $5.95 a share, 28% higher than the company's 20-day volume-weighted average share price.

The Vancouver-based Goldcorp said the unsolicited offer was in line with its strategy of portfolio enhancement, particularly its focus on investing in low political risk jurisdictions. Of particular interest is the acquisition of the Abitibi mining district in Quebec, a proven high-quality operation.

"Goldcorp shareholders will benefit from a long-lived, high-quality gold mine with low all-in sustaining costs capable of generating long-term free cash flows," said Goldcorp CEO Chuck Jeannes in a statement on Monday. "With our world-class Eleonore project in Northern Quebec due to commence production later this year, Goldcorp will be the largest gold producer in the province with the resources to continue building collaborative, long-term relationships while leveraging corporate and regional synergies."

Must Read: Procter & Gamble (PG) Declares 60.15c Quarterly Dividend

In an SEC filing, Goldcorp said Osisko has refused to entertain merger or acquisition talks over the last five years.

"The Offeror has made repeated and genuine attempts to discuss a mutually beneficial transaction with Osisko. Osisko has continually refused to either negotiate or engage in meaningful dialogue, leading to the current circumstances where the Offeror believes the Offer made by this Offer and Circular is the only way to deliver the expected benefits of a transaction to all Osisko Shareholders," the company said in the filing.

On Tuesday, Goldcorp shares slid 2.5% to $22.48, adding to 3% in losses sustained since news broke Monday.

Of possible concern to investors, Canadian miners have suffered over the past year as the price of gold slumped approximately 25%. The takeover bid will mark the Canadian gold industry's first in almost a year as companies opted to focus on cutting costs and navigating choppy waters.

TheStreet Ratings team rates GOLDCORP INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate GOLDCORP INC (GG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GG's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • 42.73% is the gross profit margin for GOLDCORP INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, GG's net profit margin of 0.53% is significantly lower than the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, GOLDCORP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has decreased to $274.00 million or 36.86% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GG $13.73 0.00%
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs