Shares in junior gold miner Gold Eagle Mines Ltd. (OTC:GEAFF) were expected to move higher when the Toronto market opened Thursday after Goldcorp. Inc. (NYSE:GG) made a C$1.5-billion bid for its neighbor in the Red Lake district of Northern Ontario.
According to details of the cash and stock deal, the transaction values each Gold Eagle share at C$12.62 based on the July 30, 2008 closing price of C$39.85 for Goldcorp's common shares. That represents a 19% premium to Gold Eagle's closing price of C$10.57 on July 30. For investors who have owned Gold Eagle since the beginning of the year, the deal currently represents a return on investment of 50%.
The transaction, expected to close at the end of September, has been approved by the board of directors at both Goldcorp and Gold Eagle Mines. Final approval is subject to the favorable vote of 66 2/3% of the Gold Eagle common shares voted at a special meeting of shareholders called to approve the transaction. One of Gold Eagle Mines largest shareholders is Agnico-Eagle Mines Ltd. (NYSE:AEM).