Reuters
U.S. miners launch bids for Wheaton, Iamgold
Thursday May 27, 10:14 pm ET
By Nicole Mordant
VANCOUVER, British Columbia, May 27 (Reuters) - Two Canadian mining firms due to merge next month received separate unsolicited takeover offers on Thursday from two U.S.-based miners looking to break up the planned marriage.
Idaho-based Coeur d'Alene Mines Corp. (NYSE:CDE - News) offered $1.7 billion (C$2.5 billion) in stock and cash to buy mid-sized gold producer Wheaton River Minerals Ltd. (Toronto:WRM.TO - News; AMEX:WHT - News), which agreed in March to an offer from rival Iamgold Corp. (AMEX:IAG - News; Toronto:IMG (News - Websites) .TO - News) to create one of the world's 10 biggest gold miners.
Separately, Denver-based Golden Star Resources Ltd. (AMEX:GSS - News; Toronto:GSC.TO - News) launched an all-share bid worth about $884 million for Toronto-based Iamgold, a company with ambitions to expand its gold portfolio outside of West Africa.
In an unusual move, Golden Star and Coeur, the world's biggest silver producer, agreed that if they are successful, they will split the break-up fees from the Wheaton River/Iamgold deal. The net result of this would be that Coeur would pay Golden Star $26 million, according to Golden Star.
Coeur, in a letter sent to Wheaton River chairman and chief executive Ian Telfer, said that it was prepared to offer the equivalent of $3.28 per Wheaton River share (C$4.50) to acquire the Vancouver-based company -- a 14 percent premium to Wheaton River's closing stock price on Thursday.
Salman Partners analyst Haytham Hodaly said that the premium meant that Wheaton River shareholders would be better off under the Coeur offer than the earlier Iamgold bid. But he warned that the premium was small and could be easily erased in a single trading day.
"Investors are going to to have to look at the qualitative aspects as, on the quantitative aspect, (the Coeur offer) is not that much more attractive," Hodaly said.
Both Wheaton River and Iamgold declined to comment. Last week both said competing bids were unlikely.
Keen to elevate itself into the ranks of the major gold producers, Iamgold unveiled a $2.2 billion friendly all-equity bid for Vancouver-based Wheaton on March 30. However, as the share prices of both have dropped substantially since the announcement, the bid is now worth about $1.6 billion.
Wheaton River shareholders are due to vote on the Wheaton River-Iamgold combination on June 8.
Hodaly said the speed with which the two unsolicited bids were cobbled together was a surprise. "What isn't a surprise are the bids after what has happened to Iamgold and Wheaton's share prices," he said.
Amid concerns that it was overpaying for Wheaton River, Iamgold's stock listed in Toronto has dropped 21 percent since the union was announced. Shares of Wheaton, which is also a substantial silver and copper producer, are down 4 percent.
Golden Star said it had offered Iamgold shareholders 1.15 Golden Star shares for each Iamgold share, a 13 percent premium on Iamgold's Thursday closing price on the Toronto bourse.
"We believe that the proposed business combination between Golden Star and Iamgold is more beneficial to Iamgold and its shareholders than the previously announced combination between Iamgold and Wheaton River Minerals," Golden Star Chief Executive Officer Peter Bradford said.
Coeur Chairman and Chief Executive Officer Dennis Wheeler said a Coeur-Wheaton River union would increase the U.S.-based miner's silver output by 45 percent. The Coeur offer has an enterprise value of $1.8 billion, including debt.
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