April 21 (Bloomberg) -- Goldcorp Inc. will drop its C$3.2 billion ($2.9 billion) hostile bid for Osisko Mining Corp., electing to walk away rather than increase the offer and risk overpaying, after Canadian rivals Yamana Gold Inc. and Agnico Eagle Mines Ltd. reached a friendly takeover deal.
Goldcorp, which was seeking control of Osisko’s Canadian Malartic gold mine in Quebec, won’t amend its cash-and-share bid for Osisko that’s scheduled to expire tomorrow, the Vancouver-based company said in a statement.
“We stated from the beginning of this process that we would remain disciplined with respect to our offer to acquire Osisko, and our decision not to amend the offer is consistent with that commitment,” Goldcorp Chief Executive Officer Chuck Jeannes said in the statement today.
The pursuit of Osisko by three companies shows how acquisitions remain an important way for gold producers to grow and to replenish their reserves, despite a string of big mining deals in recent years that have led to billions of dollars of writedowns. Merger talks between Barrick Gold Corp. and Newmont Mining Corp., the two largest producers, broke down April 18, according to two people familiar with the matter. Those negotiations could still be revived, the people said.
Goldcorp, which after Barrick is the world’s largest gold producer by market value, sparked a bidding war with its Jan. 13 bid for Osisko, a proposal that was rejected as too low. Up to that point, the companies had held talks on and off for five years and signed confidentiality agreements in 2008 and 2012.
Osisko ran a search for alternatives to Goldcorp’s offer and announced April 2 that Yamana had agreed to buy 50 percent of Osisko’s assets. That transaction also included financing deals with two Canadian pension funds. Goldcorp responded a week later by raising its own bid, after which Agnico joined Yamana in a friendly transaction to buy the whole of Osisko.
Goldcorp has said Canadian Malartic, which started commercial production in 2011, would rank as one of its best mines.
“We move forward with an outstanding portfolio of mines and projects,” Jeannes said today.
Agnico and Yamana plan to jointly operate Osisko’s mines and some of its exploration properties while spinning off some other assets into a new company.
Osisko fell 3.8 percent to C$7.70 at the close in Toronto while Goldcorp rose 2 percent to C$26.53. Agnico dropped 3.9 percent and Yamana was down 2.5 percent.
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