Early Monday, the gold producer announced it 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 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. "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."
Of concern to shareholders, 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 chose 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."