Agnico Eagle, Yamana Gold And Osisko Mining Strike $3.6 Billion 'Friendly ...

It's a merger, Canadian style: Three Canadian gold mining companies - Agnico Eagle Mines, Yamana Gold and Osisko Mining - are coming together in an apparent attempt to sidestep a takeover bid for Osisko by a fourth miner, Goldcorp . But where Goldcorp's efforts were hostile, Osisko's agreement with Agnico and Yamana is decidedly friendlier.

Agnico and Yamana reported Wednesday that they have entered into a joint, "friendly" agreement to acquire 100% of Osisko's shares for $7.42 ($8.15 in Canadian dollars) per share, giving the deal a $3.55 billion value ($3.9 billion in Canadian dollars). The deal comes less than a week after competitor miner Goldcorp amped up its efforts to take over Osisko; on April 10, Goldcorp updated its January offer for the company and said it would now pay $6.97 per share ($7.65 in Canadian dollars) in a deal worth $3.28 billion ($3.6 billion in Canadian dollars). The Agnico-Yamana offer represents an 11% premium to Goldcorp's offer.

Shortly before Agnico and Yamana announced their joint agreement, Goldcorp got even more hostile, saying that it intends to replace Osisko's board of directors with its own board of nominees at Osisko's annual meeting in May, essentially launching a proxy battle. Osisko nor its new owners commented on Goldcorp's actions.

Upon the closing of the deal, Agnico and Yamana will each own 50% of Osisko, and the companies said Wednesday that they will form a joint committee to operate Osisko's Canadian Malartic mine in Quebec. The Canadian Malartic mine, estimated to have a production capacity of 500,000 to 600,000 ounces of gold per year over a 16-year mine life, is the primary reason Osisko found itself the subject of a bidding war. The mine is seen as a stable one, and Osisko has in the past said it should be valued at $4.4 billion - and therefore, that Goldcorp's prior offers for the company are just far too low.

"The Osisko Board determined that the Goldcorp offer fails to adequately compensate Osisko shareholders for, among others things, the strategic value of Osisko's world-class asset base, the significant upside potential of Osisko's Canadian Malartic Mine," Osisko said in March.

The Agnico-Yamana, however, was much more attractive to Osisko. "I believe we have delivered shareholders the superior value option to the hostile attempt to acquire our company," Sean Roosen, Osisko president and CEO, said in a statement Wednesday.

Following the close of the transaction, Osisko shareholders will own approximately 16.7% of Agnico Eagle and approximately 14.4% of Yamana.

For its part, Agnico Eagle says that the Osisko acquisition strengthens its presence in Quebec without taking on a political risk. "Agnico Eagle has approximately 50 years of operating history in Québec, and over that time the company has continued to expand its mining presence in a measured and systematic way. This transaction further enhances our Québec operating platform through the addition of a fourth producing mine," Sean Boyd, Agnico president and CEO, said in a statement Wednesday. "With this acquisition, Agnico Eagle will become Québec's largest gold producer, which demonstrates our commitment to Québec and various stakeholders in the Province.

Peter Marrone, Yamana's chairman and CEO of Yamana, echoed Boyd's sentiments, calling the deal a low risk way for it to get into Quebec, and that the acquisition "complements our existing presence in the Americas."

The deal is expected to close by early June, pending regulatory approval as well as the approval of Osisko shareholders by a two-thirds vote that will occur at a meeting to be held in May; the approval of Agnico Eagle and Yamana shareholders is not required.

Following news of the deal, shares of Agnico dropped fast and are still down 7.7%. Yamana also fell on the news and is still down 3.7%; Osisko, meanwhile, popped 6.3% while shares of Goldcorp remained relatively unaffected, and are currently trading with an 0.7% bump. Year-to-date, Osisko is the clear winner of the bunch: it has posted a 51% return for 2014 trading thus far compared to a 10.5% return for Agnico, a 4.8% gain for Goldcorp and a 6.7% drop for Yamana. Four Ways To Invest In Gold

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