Eldorado Withdraws Proposal to Buy Andean Resources Following Goldcorp Bid

Eldorado Gold Corp. said it decided not to proceed with its proposal to acquire Andean Resources Ltd. after its bid was trumped by a C$3.6 billion ($3.4 billion) offer from Goldcorp Inc.

Goldcorp, the second-largest Canadian gold producer, said last week it agreed to acquire the Australian miner for 0.14 of a share for each Andean stock, or cash payment of C$6.50 a share up to a maximum of C$1 billion. Vancouver-based Eldorado had bid 0.310 of a share for each of Andean’s, valuing each at C$6.36 based on its Sept. 2 closing price.

The companies were pursuing Andean for its Cerro Negro mining project in Argentina. The project is a “good-to-have” asset and isn’t a “need-to-have asset,” Eldorado said today in a statement.

Eldorado shareholders “expressed a note of caution in terms of Eldorado entering a value-destroying auction whose main result will be the enrichment of short-term market participants,” Chief Executive Officer Paul Wright said in the statement.

“The gold industry, as a whole, has an appalling track record of value destruction and Eldorado has no intention of following in these unfortunate footsteps,” he said.

Eldorado rose as much as 2.6 percent after the announcement, and was up 29 cents, or 1.5 percent, to C$20.18 at 4 p.m. in Toronto Stock Exchange trading. Andean fell 59 cents, or 8.5 percent, to C$6.39.

Andean CEO Wayne Hubert said today his company hasn’t received other proposals and will study any fresh bid.

To contact the reporter on this story: Simon Casey in London at scasey4@bloomberg.net.

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