More reports on: M&A

Osisko Mining takes Goldcorp's $2.33-bn takeover bid to court

news
30 January 2014

Montreal-based mid-tier gold producer Osisko Mining yesterday said that it has sued Goldcorp Inc alleging that its suitor misused confidential information while tabling its hostile C$2.6 billion ($2.33 billion) takeover bid.

The lawsuit comes just a week after Osisko Mining rejected the unsolicited stock-and-cash takeover bid saying that the offer was "financially inadequate and not in the best interests of Osisko."  (See: Canadian gold miner Osisko rejects $2.37-bn bid from Goldcorp)

Osisko Mining, which has filed the suit in the Québec Superior Court, alleges that while making its hostile take-over bid, ''Goldcorp misused confidential information and otherwise acted in a manner not permitted by the confidentiality agreement between the parties.''

''Osisko also alleges that Goldcorp acted in bad faith and in a manner contrary to applicable law, in actions taken by Goldcorp prior to launching its hostile Bid.  Accordingly, Osisko is seeking an order enjoining the hostile bid and further conduct by Goldcorp that Osisko alleges is in breach of the Confidentiality Agreement,'' it further said in its suit.

On 14 January, Vancouver-based Goldcorp offered 0.146 of its shares, plus $2.26 in cash, for each Osisko share, valuing the company at $5.95 a share, a 15 per cent premium over its 10 January closing price.

Osisko shares have since traded above the $5.95 implied value, and analysts have suggested that Goldcorp will have to raise its offer if it wants to close the deal.

Osisko rejected the deal saying that Goldcorp's offer significantly undervalues its world-class Canadian Malartic mine, and its portfolio of high-potential projects in North America. ''The premium offered by Goldcorp, as well as the transaction multiples implied by the offer, are both significantly below the relevant precedents.''

Osisko also said that it was working with its advisers including talks with third-parties regarding "strategic alternatives," and  urged its shareholders not to tender their stock to Goldcorp's bid.

Goldcorp, which once held 10.1 per cent in Osisko, had tabled a highly conditional and non-binding 0.0661, 0.1805 and 0.22 Goldcorp shares for each Osisko share in  November 2008, April 2009 and September 2009 respectively.

Osisko noted that these proposed or implied exchange ratios would currently translate into values per Osisko shares of around $1.78, $4.85 and $5.89, compared to Osisko's closing price of $6.47 on 17 January 2014.

Goldcorp sold its stake in Osisko in 2011 for $13.75 per share netting a total of around $530 million.

Osisko's flagship asset is Canadian Malartic in Quebec, one of the world's largest gold mines.

With over 10 million ounces of established proven and probable reserves, Canadian Malartic is a world-class gold mine, with superior scale and costs relative to many of the producing assets held within the five largest North American domiciled gold producers.





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