Osisko Rejects Goldcorp $2.4 Billion ‘Opportunistic’ Bid

Osisko Mining Corp. (OSK) rejected Goldcorp Inc.’s C$2.6 billion ($2.4 billion) unsolicited bid because it’s too low and said the Canadian company is reviewing other options.

The “meager” premium offered by Goldcorp’s shares-and-cash offer is significantly below comparable transactions, Montreal-based Osisko said today in a statement. It said the offer undervalues its Canadian Malartic mine in Quebec, which started producing in 2011.

“The Goldcorp offer has been opportunistically timed to occur before Canadian Malartic enters what Osisko expects will be its most productive years,” Osisko said. “The true strategic value of the company’s assets will be demonstrated as the review of value-maximizing alternatives progresses.”

Goldcorp, the world’s second-largest gold producer by market value, said Jan. 13 it would offer to pay Osisko holders 0.146 Goldcorp shares plus C$2.26 in cash per share. The offer was a 15 percent premium based on the closing prices before the deal was announced. The company has arranged a $1.25 billion credit facility from Bank of Nova Scotia to help fund the deal.

Goldcorp, based in Vancouver, is seeking control of Osisko’s Quebec operation, which Chief Executive Officer Chuck Jeannes said Jan. 13 would rank among the company’s top mines by free cash flow, output and net asset value.

Gold’s Fall

Gold-mining companies declined last year amid the metal’s biggest annual drop in three decades, creating opportunities for producers seeking to add more profitable mines.

Goldcorp rose 1.7 percent to close at C$25.85 in Toronto. Osisko was unchanged at C$6.47, 7.3 percent more than the current offer value of C$6.03 a share.

“The board of directors is aggressively pursuing value-maximizing alternatives,” Osisko CEO Sean Roosen said today on a conference call.

Jeff Wilhoit, a Goldcorp spokesman, didn’t immediately respond to an e-mail and voicemail seeking comment.

The offer is “fair,” Goldcorp’s Jeannes said in a Jan. 13 interview. Osisko’s shares rose by about 25 percent in the 30 days leading up to the bid, he said.

Osisko said today that while it has held preliminary talks with Goldcorp in the past five years, the discussions “never led to a credible proposal” from Goldcorp.

‘Highly Conditional’

“Instead, Osisko has been presented with highly conditional and non-binding proposals that offered inadequate premiums, and value propositions which did not warrant further consideration or engagement by Osisko,” it said in the statement.

Goldcorp said in a Jan. 14 filing that its unsolicited offer followed five years of “frustrated attempts” to engage in takeover talks and that Osisko refused to provide information Goldcorp (G) needed for due diligence.

BMO Capital Markets and Maxit Capital LP are financial advisers to Osisko. Canadian legal counsel to the company is Bennett Jones LLP and Lavery, de Billy and its U.S. counsel is Skadden, Arps, Slate, Meagher & Flom LLP. Osisko’s special committee has retained Stikeman Elliott LLP as its legal adviser.

GMP Securities LP and Bank of Nova Scotia are Goldcorp’s financial advisers on the bid and Cassels Brock & Blackwell LLP and Neal, Gerber & Eisenberg LLP are providing legal advice.

Goldcorp said the offer is open until 5 p.m. Toronto time on Feb. 19 and will require the acceptance of investors holding more than 66.7 percent of Osisko’s shares.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Steven Frank at sfrank9@bloomberg.net

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