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

The Deal: Osisko Rejects Goldcorp Bid, Threatens Poison Pill

NEW YORK (TheStreet) -- Canadian gold producer Osisko Mining Corp. has rejected Goldcorp Inc.'s C$2.6 billion ($2.4 billion) bid, and warned it may use a poison pill defense to find an alternative to an offer the company labeled as hostile. Goldcorp shares were rising 1.1% to $23.43.

"Goldcorp's offer significantly undervalues Osisko's world-class Canadian Malartic mine, and the rest of the company's portfolio of high-potential projects in North America," Montreal-based Osisko said. "The premium offered by Goldcorp, as well as the transaction multiples implied by the offer, are both significantly below the relevant precedents."

Osisko indicated its opposition to the bid as early as Jan. 15, when Goldcorp unveiled its unsolicited offer of 0.146 of a share and C$2.26 in cash for each Osisko share. The offer represented a 15% premium to Osisko's closing price the day before the bid, but quickly slipped to a discount as investors bid up the target in expectation of an improved offer.

Goldcorp wants control of Osisko's Malartic gold mine in Quebec, which has proven and probable reserves of 10.1 million ounces of gold. The mine produced 475,277 ounces of gold in 2013 at an average cost of C$760 per ounce.

Must Read: Falcone Takes Stand in LightSquared Case

Osisko said it expects output from the mine to increase and costs to fall in the coming years. Goldcorp's offer was " opportunistically timed to occur before Canadian Malartic enters what Osisko expects will be its most productive years," the target said.

Goldcorp is one of a handful of large gold miners that has the financial strength to take advantage of depressed gold prices that have hit the valuations of many producers. Osisko shares were down 36% over the twelve months prior to Goldcorp's bid.

Goldcorp said on Jan. 15 it had spent more than five years seeking a friendly deal with Osisko, which it first approached in August 2008. It described those efforts as a "history of frustrated attempts," but said it still hoped to engage with Osisko's board.

Osisko gave no indication that it was interested in meeting with the bidder and said it was ready to trigger a poison pill defense to gain time to "pursue competing bids or alternative strategies."

Osisko claimed it could issue rights attached to its existing shares because Goldcorp's bid runs until Feb. 19, a 35-day duration that is below the 60-day minimum that would make the offer a "permitted bid" under the terms of Osisko's shareholder rights plan. The poison pill could be dispensed as soon as Jan. 27, though Osisko's board said that it had decided to defer the rights issue for the time being.

Osisko's shareholder rights plan, adopted in May 2010, allows the company to issue a discounted new share for each existing share in the event that a hostile bidder acquires a 20% stake or where a takeover bid is not a permitted bid.

Goldcorp said it will wait to see Osisko directors' circular before making further comment on its offer.

Osisko has tapped BMO Capital Markets and Maxit Capital L Pfor financial advice. Its Canadian legal counsel is Bennett Jones LLPA Skadden, Arps, Slate, Meagher & Flom LLP team of Christopher MorganMichael Acedo and Lyndsey Kiser are providing advice on U.S. law.

A special committee created by Osisko to assess the bid is taking legal advice fromStikeman Elliott LLP.

Goldcorp is taking financial advice from GMP Securities LP and Bank of Nova Scotia. It is taking legal counsel from Cassels Brock & Blackwell LLP's Paul Stein, Jeff Roy, Pollyanna LordJennifer HansenAlexis Bowie and Jamie Litchen, and from Neal, Gerber & Eisenberg LLP's David Stone, John KoenigsknechtBetsy ThelenBeth RosnerAndrea Despotes and and Chloe Milstein.

-- By Paul Whitfield in New York

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 $19.19 2.46%
AAPL $92.69 -0.59%
FB $119.49 1.43%
GOOG $711.11 1.40%
TSLA $214.93 1.61%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs