Can Osisko Mining Repay Its Debt?
The Investment Doctor
The Investment Doctor
Nov. 17, 2014, 9:10 AM
- Osisko Gold Royalties (OTC:OKSKF, OTCPK:OSKFF) agrees to acquire Virginia Mines (OTCPK:VGMNF) for ~$461M in an all-stock deal, combining two companies that derive their income from royalties from gold mines in Quebec.
- The companies say the deal gives them greater liquidity, stronger finances and better access to capital.
Apr. 23, 2014, 11:19 AM
- Yamana Gold (AUY -0.6%) and Agnico Eagle (AEM +2%) are "clear winners" for acquiring Osisko Mining (OSKFF) because it is crucial for gold miners to secure low-risk production at this stage in the cycle, National Bank analyst Steve Parsons says.
- It is increasingly difficult to find large gold deposits in mining friendly jurisdictions - such as Osisko's Canadian Malartic mine in Quebec - and companies need to look at obtaining those assets now or face declining production profiles in the future, Parsons says, adding that now is a good time for mid-tier miners to do business with senior producers who are busy cleaning up their balance sheets.
- For AUY, Parsons says the addition of a low-cost, cornerstone asset should help the stock get re-rated towards its higher-multiple peers; for AEM, the deal is accretive on all metrics and adds another cornerstone asset to its already concentrated portfolio.
Apr. 21, 2014, 12:51 PM
- Goldcorp (GG +0.8%) officially gives up its bid for Osisko Mining (OSKFF -0.1%), saying it will not raise its offer to acquire the company; its most recent C$3.6B offer will expire tomorrow night before midnight.
- Yamana Gold (AUY -3.5%) and Agnico Eagle Mines (AEM -3.7%) joined forces last week for a C$3.9B offer to acquire Osisko.
Apr. 16, 2014, 9:51 AM
- Yamana Gold (AUY -1.5%) and Agnico Eagle Mines (AEM -3.3%) agree to acquire Osisko Mining (OSKFF) for C$3.9B, or C$8.15/share.
- The total offer consists of C$1B in cash, C$2.33B in AUY and AEM shares, and shares of a new company with an implied value of ~C$575M.
- The companies say the offer represents an ~11% premium to the implied value of Goldcorp's (GG +2%) hostile bid.
- The deal replaces a transaction announced April 2 in which AUY agreed to buy 50% of Osisko’s assets.
Apr. 10, 2014, 9:56 AM
- Goldcorp's (GG -1.5%) sweetened bid hasn't swayed Osisko Mining (OSKFF +1.6%) CEO Sean Roosen, who makes it clear his company still favors a deal with Yamana Gold (AUY +1.4%) since it ensures continued strong exposure to the Canadian Malartic mine in Quebec: "It has a higher upside than Goldcorp ever will."
- Goldcorp's Chuck Jeannes sees it differently, of course, maintaining that Osisko shareholders will retain continued exposure to Canadian Malartic as well as benefit from Goldcorp’s portfolio of world-class assets.
- Osisko shareholders may be turned off by the complexity of the AUY deal; at least one analyst thinks the GG bid will be viewed more favorably by investors because it is more straightforward and worth slightly more.
Apr. 10, 2014, 7:26 AM
- Goldcorp (GG) has increased its offer for Osisko Mining (OSKFF) to C$7.65 a share in cash and stock, making the deal worth C$3.6B vs C$2.6B previously.
- Goldcorp is offering 0.17 share and an increased cash bid of C$2.92 a share.
- Osisko has been trying to stave off Goldcorp's advances with a deal with Yamana Gold (AUY). (PR)
Apr. 2, 2014, 6:40 PM
- Yamana Gold (AUY) looks to have captured a huge prize in the Malartic gold mine via the acquisition of a 50% stake in Osisko Mining's (OSKFF) mining and exploration assets, but analysts are skeptical about AUY effectively paying a premium without gaining a controlling interest in the mine itself.
- Cowen analyst Adam Graff approves of the deal as it would help generate some tax savings for AUY in Canada, but he doubts the savings will offset the negative impact of the purchase premium.
- Investor Adrian Day says the implied price AUY would pay doesn't look grossly high, but the deal structure, where Yamana will not get control, is unusual; if hostile takeover bidder Goldcorp (GG) comes back with a better offer, he thinks many shareholders will find it easier to wrap their heads around than AUY's deal.
- Analysts had not expected another mining company to challenge Goldcorp, and some see a higher bid coming: "They have been chasing this asset for five years and there is no reason they would let it slip through their fingers."
- AUY shares -2.2% on the day, but most gold miners gained: OSKFF +7.7%, GG +2%, NGD +4.4%, ABX +4%, AGI +4%, NEM +3.3%, ANV +3.3%, NG +3%, GFI +2.7%, KGC +2.6%.
Apr. 2, 2014, 9:59 AM
- Yamana Gold (AUY +1.7%) and Osisko Mining (OSKFF +3%) announce a partnership in which AUY will acquire a 50% interest in Osisko's mining and exploration assets for C$441.5M in cash and 95.7M AUY common shares having an aggregate value of C$929.6M.
- AUY will become an equal partner in all of Osisko's mining and exploration assets; Osisko will continue to operate the Canadian Malartic Mine and all other projects under the guidance of a joint operating committee.
- AUY is stepping in as Osisko's white knight as the latter attempts to fight off a hostile takeover bid by Goldcorp (GG +2.9%), but the deal is complicated and will require some selling to shareholders.
Mar. 11, 2014, 12:57 PM
- Osisko Mining (OSKFF +0.3%) urges patience from its shareholders and says it is still pursuing a range of alternative to Goldcorp's (GG +0.4%) hostile C$2.89B takeover offer, a day after Goldcorp said it is extending its offer to acquire all of Osisko’s shares to March 21.
- Osisko countered with a statement reminding its shareholders that a settlement agreement between the two companies stipulates that Goldcorp cannot take up and pay for any Osisko shares deposited to its bid before April 15.
- Osisko shares have been trading well above the implied value of Goldcorp’s offer since the bid was announced Jan. 14.
Mar. 3, 2014, 10:57 AM
- Osisko Mining (OSKFF +5.1%) agrees to drop its legal effort to block Goldcorp's (GG +2.4%) hostile takeover bid, a possible sign that a rival offer may emerge.
- Osisko says it will allow full due diligence access to its business and assets by April 1 and won’t apply its shareholder rights plan; in exchange, Goldcorp will not to take up and pay for shares deposited in the takeover bid before April 15 unless Osisko announces a transaction with another party.
- In its own announcement, Osisko says it is aggressively pursuing alternatives, suggesting it is part of the reason for the settlement with Goldcorp.
Feb. 19, 2014, 3:19 PM
- Osisko Mining (OSKFF -3.8%) CEO Sean Roosen again urges shareholders to reject Goldcorp's (GG -2.8%) unsolicited takeover offer and adds that the bid is preventing them from getting a dividend.
- Roosen says Osisko had set the stage for significant dividend policy for 2014, but claims that some of the money is now being spent on lawyers and bankers dealing with the legal challenge against Goldcorp.
- TD Securities downgrades Osisko to Hold from Buy, believing there’s significant risk the Goldcorp offer will fail with an unfavorable court ruling.
- Late Tuesday, GG extended its C$2.89B hostile bid for Osisko to March 10.
Jan. 30, 2014, 10:51 AM
- Goldcorp's (GG -3.5%) hostile takeover offer for Osisko Mining (OSKFF -3.9%) is turning very hostile, as Osisko takes Goldcorp to court and accuses its bigger peer of using confidential information when it launched its bid earlier this month.
- Goldcorp denies the allegations and plans to defend its position; GG also says Canada's antitrust regulator has indicated it does not intend to challenge the move to acquire Osisko.
- In addition to throwing uncertainty into the takeover battle, the legal action may reduce the likelihood of a friendly deal; investors believe GG will raise its bid, but it may prove tougher to get Osisko to the bargaining table if the company thinks GG misused confidential data.
Jan. 29, 2014, 10:59 AM
- Osisko Mining (OSKFF +2%) says it is in the process of mailing its recommendation to shareholders urging them to reject Goldcorp's (GG +2.7%) hostile takeover offer, which it calls “opportunistic” and undervalued; GG has valued its cash and stock offer at C$5.95/share, but Osisko shares have consistently traded above that level since the offer was announced.
- Osisko CEO Sean Roosen tells the TD Securities Mining Conference in Toronto the C$2.6B bid for his company is not only bad for his shareholders but negative for the entire gold mining sector.
- The CEO says if such low offers become acceptable in the sector, then it's hard to see how portfolio managers can make money investing in emerging growth companies such as Osisko.
Jan. 21, 2014, 7:49 AM
- Osisko Mining (OSKFF) is recommending shareholders reject Goldcorp's (GG) C$2.6B hostile takeover offer, saying it "significantly undervalues" its assets, including its flagship Canadian Malartic gold mine in Quebec.
- Analysts have suggested that GG will have to raise its offer if it wants to close the deal, and Osisko has traded well above the $5.95/share implied value of the offer since the stock-and-cash proposal was first announced last Monday; shares closed at $6.47 in Toronto yesterday.
Jan. 15, 2014, 9:50 AM
- Osisko Mining (OSKFF -0.6%) says it has received and is reviewing Goldcorp's (GG -1.5%) hostile C$2.6B takeover proposal but views the 15% premium implied by the offer as "very low" and "opportunistic."
- Osisko says it has formed a special committee to study the offer and will communicate with shareholders "as appropriate."
- The deal, if completed, would be the largest in the global gold mining sector since late 2011.
Jan. 13, 2014, 7:11 AM
- Goldcorp (GG +0.5%) is offering C$2.26 a share in cash and 0.146 share in stock.
- The offer values Osisko Mining (OSKFF) at C$5.95 a share, or a premium of 15% over its Friday closing price in Toronto.
- The proposal is conditional on acceptance by two-thirds of Osisko's shareholders by Feb. 19.
- It doesn't look like Goldcorp has the acceptance of Osisko's board, with Goldcorp saying that "Our clear preference remains to engage with Osisko." The Canadian company also has a shareholder rights plan.
- The deal will provide Goldcorp with ~10M oz. in gold reserves.
- The transaction is "immediately accretive on key per-share metrics, including free cash flow, operating cash flow, net asset value, gold production and gold reserves," GG says.
- Goldcorp will receive cash that it can use to develop "key growth projects at Cerro Negro, Éléonore and Cochenour over the next 18 months." (Previous) (PR)
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