Seeking Alpha

Goldcorp may be overpaying for Osisko assets, Cowen says

The verdict among analysts seems mixed regarding Goldcorp's (GG -0.8%) unsolicited $2.6B bid for Osisko Mining; shares are down but well off early lows.

Barclays believes both the producing Canadian Malartic mine as well as potential development assets fit well within the geographical risk profile of GG's current portfolio of mines.

Cowen notes that while the acquisition makes sense from an operational standpoint, it thinks GG may have overpaid; Osisko already was trading at a sizable premium to intrinsic value, and the additional premium adds little, if any, accretive value to GG.

J.P. Morgan adds that the Malartic asset will be relatively susceptible to any further weakness in the gold price, given the low grade of the reserves.

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Comments (3)
  • wapiti
    , contributor
    Comments (711) | Send Message
    I love the way these Monday morning quarterbacks (Analysts) think they know more then the CEOs of the companies. If they know so much, why arent they the CEO? BS job
    13 Jan 2014, 02:32 PM Reply Like
  • SimonSaysShort
    , contributor
    Comments (112) | Send Message
    Solid logic there. Because CEO's don't have any incentives to say things that cause the stock price to go up...right...and no CEO has ever been wrong before!
    13 Jan 2014, 02:37 PM Reply Like
  • PeakOiler
    , contributor
    Comments (298) | Send Message
    There are so very few large, economical gold fields left in Canada and so those good ones still available require some premium on a buy out. GG paid a reasonable price for cheap gold.
    13 Jan 2014, 02:37 PM Reply Like
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