Canadian gold miners Agnico Eagle Mines Ltd. (AEM,AEM.TO) and Yamana Gold, Inc. (AUY,YRI.TO) agreed Wednesday to jointly acquire smaller peer Osisko Mining Corp. (OSK.TO) for C$8.15 per share in a cash and stock deal valued at about C$3.9 billion.
Agnico Eagle and Yamana Gold will split Osisko down the middle, and share the coveted Canadian Malartic Mine in Québec.
The Osisko Board has unanimously approved the deal as being in the best interests of Osisko and its shareholders. The board will recommend that Osisko shareholders vote in favor of the deal.
The total consideration will include about C$1.0 billion in cash, about C$2.33 billion in Agnico Eagle and Yamana shares, and shares of a new company or "Spinco", with an implied value of about C$575 million.
Spinco is 50:50 joint acquisition entity formed by Agnico Eagle and Yamana Gold to acquire Osisko. A joint committee will be formed to operate the Canadian Malartic Mine in Québec as well as jointly explore and potentially develop the Kirkland Lake assets, and continue the exploration at the Hammond Reef, Pandora, Wood-Pandora properties.
Under the terms of the offer, Osisko shareholders will be entitled to receive 0.07264 of a Agnico Eagle common share and 0.26471 of a Yamana common share plus C$2.26 in cash for each Osisko common share held by them. Osisko shareholders will also receive one common share of Spinco with a value of C$1.20.
The deal, which is subject to the approval of Osisko shareholders by a two thirds vote, is expected to close by early June 2014. The approval of the shareholders of Agnico Eagle and Yamana are not required.
Osisko noted that shareholders, including the directors and senior officers of Osisko, holding in aggregate about 4.5 percent of the issued and outstanding common shares of Osisko, have agreed to vote their shares in favor of the deal.
The deal also thwarts the sweetened C$3.6 billion hostile bid from larger peer Goldcorp. Inc. (GG, G.TO) that was launched on Thursday. Goldcorp had initially made a bid of C$2.6 billion in mid-January.
The offer represents an 11 percent premium to the implied value of Goldcorp's revised hostile bid, a 9.7 percent premium over Osisko Mining's closing share price of C$7.43 on Tuesday, and a 57.6 percent premium over Osisko Mining's unaffected closing share price of C$5.17 on January 10.
Osisko had earlier on April 2 tried to thwart Goldcorp's hostile advances by agreeing to sell a 50 percent stake to Yamana Gold for C$929.6 million in a stock and cash deal. Yamana and Osisko have now agreed to terminate the agreement, with Yamana waiving its break fee under that agreement.
Following the closure of the deal, Osisko shareholders will own about 16.7 percent of Agnico Eagle and about 14.4 percent of Yamana. Agnico Eagle will finance its share of the cash consideration of about C$501 million from its existing $1.2 billion credit facility.
Meanwhile, Osisko has agreed to provide a 5 business day right to Agnico Eagle and Yamana to match a superior proposal, if made to Osisko. The company has also agreed to pay a termination fee of C$195 million to Agnico Eagle and Yamana, shared equally.
In Wednesday's regular trading session, AEM is currently trading at $28.44, down $2.05 or 6.72% on a volume of 2.35 million shares, and AUY is trading at $8.03, down $0.35 or 4.18% on a volume of 5.22 million shares.
Meanwhile, OSK.TO is trading on the TSX at C$7.86, up C$0.43 or 5.79% on a volume of 24.43 million shares.
For comments and feedback contact: editorial@rttnews.com
Business News