wildcard
3rd September 2010, 09:29 AM
AUSTRALIA'S second-largest gold company, Andean Resources, has recommended a $C3.6 billion ($3.75bn) offer from Goldcorp Inc.
http://www.theaustralian.com.au/business/canadas-375bn-andean-swoop/story-e6frg8zx-1225914008628
http://resources3.news.com.au/images/2010/09/03/1225913/941247-aus-bus-pix-gold-block.jpg
That bid trumped an earlier bid from fellow Canadian miner Eldorado Gold, as the sector undergoes further consolidation.
Following Newcrest Mining's completion this week of its $10bn takeover of Lihir Gold, Andean's board yesterday backed Goldcorp's cash and scrip offer valuing the miner at $C6.50 a share. The deal further highlights the large gap between Australia's biggest gold company in Newcrest and the smaller miners, and follows comments from major Kingsgate Consolidated last week that it could be a target.
Goldcorp's offer beat Eldorado's bid of $C6.36 and was at a 35 per cent premium to Andean's last traded price in Canada before the bid of $C4.81. Andean's local shares soared more than 30 per cent to $6.40 -- boosting its market value to almost $3.5bn -- on news of Eldorado's offer, before it revealed Goldcorp's bid late in the day.
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Goldcorp, which is the third largest North American gold company, worth about $US33bn ($36.2bn), is offering 0.14 common shares of Goldcorp per Andean share or $C6.50 cash up to $C1bn. Via the scheme of arrangement, Andean shareholders can accept a combination of cash and shares.
Andean is developing its 100 per cent owned Cerro Negro epithermal (usually associated with volcanic activity) gold project in Argentina. It has probable reserves of 2.1 million ounces of gold, which chief executive Wayne Hubert said could "double or triple" in coming years.
Mr Hubert was unavailable to comment from Canada, where the company is dual listed on the Toronto Stock Exchange -- it is about 90 per cent owned by offshore investors.
But in a statement, Mr Hubert said: "I see continuity of our plans into the future, enhanced by the additional resources Goldcorp will bring. The Andean board of directors strongly believes that the shareholders of both parties will benefit from this business combination well into the future."
Andean's largest shareholder, with about 21 per cent, Sentient Executive, has stated its intention of voting in favour of the arrangement, in the absence of a superior proposal.
Sentient also agreed to a call option agreement with Goldcorp in relation to up to a 19.9 per cent stake in the target, a move that may ward off other bidders.
The support from Andean's board is also subject to no parties trumping Goldcorp and an independent expert backing the deal.
Eldorado could not be contacted about whether it would make a higher bid. Andean has seemingly been in play for some time, after Eldorado chief executive Paul Wright said he had been talking to Andean's board for "approximately two years".
The acquisition would have added to Eldorado's $C2bn purchase of Sino Gold last year, as it seeks to become "the world's fastest growing gold producer".
Deutsche Bank analyst Brendan Fitzpatrick said the interest in Andean reflected the market's belief there was more resource potential at Cerro Negro in the ground than had been defined.
On further consolidation, he said corporate activity among the juniors and mid-caps was potentially on the cards.
"It could go either way," he said. "The smaller companies could amalgamate and fill that . . . gap between the large majors and the mid-tier names.
"(But) if you're looking at Newcrest, although they have the capacity for further acquisition, they don't necessarily require additional assets, given their growth profile, so amalgamation amongst the smaller names might seem the more likely."
Morgan Stanley strategist Gerard Minack said conditions "seem ripe" for corporate activity as cashflows rose and debt markets reopened. He also said equities, which were trading globally at 11 times 2011 earnings against an average of 15 times, were relatively cheap.
"Profits and returns are rising, rates are low, capital markets are reopening and . . . it may be easier to acquire additional sales than to generate them organically."
http://www.theaustralian.com.au/business/canadas-375bn-andean-swoop/story-e6frg8zx-1225914008628
http://resources3.news.com.au/images/2010/09/03/1225913/941247-aus-bus-pix-gold-block.jpg
That bid trumped an earlier bid from fellow Canadian miner Eldorado Gold, as the sector undergoes further consolidation.
Following Newcrest Mining's completion this week of its $10bn takeover of Lihir Gold, Andean's board yesterday backed Goldcorp's cash and scrip offer valuing the miner at $C6.50 a share. The deal further highlights the large gap between Australia's biggest gold company in Newcrest and the smaller miners, and follows comments from major Kingsgate Consolidated last week that it could be a target.
Goldcorp's offer beat Eldorado's bid of $C6.36 and was at a 35 per cent premium to Andean's last traded price in Canada before the bid of $C4.81. Andean's local shares soared more than 30 per cent to $6.40 -- boosting its market value to almost $3.5bn -- on news of Eldorado's offer, before it revealed Goldcorp's bid late in the day.
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
Goldcorp, which is the third largest North American gold company, worth about $US33bn ($36.2bn), is offering 0.14 common shares of Goldcorp per Andean share or $C6.50 cash up to $C1bn. Via the scheme of arrangement, Andean shareholders can accept a combination of cash and shares.
Andean is developing its 100 per cent owned Cerro Negro epithermal (usually associated with volcanic activity) gold project in Argentina. It has probable reserves of 2.1 million ounces of gold, which chief executive Wayne Hubert said could "double or triple" in coming years.
Mr Hubert was unavailable to comment from Canada, where the company is dual listed on the Toronto Stock Exchange -- it is about 90 per cent owned by offshore investors.
But in a statement, Mr Hubert said: "I see continuity of our plans into the future, enhanced by the additional resources Goldcorp will bring. The Andean board of directors strongly believes that the shareholders of both parties will benefit from this business combination well into the future."
Andean's largest shareholder, with about 21 per cent, Sentient Executive, has stated its intention of voting in favour of the arrangement, in the absence of a superior proposal.
Sentient also agreed to a call option agreement with Goldcorp in relation to up to a 19.9 per cent stake in the target, a move that may ward off other bidders.
The support from Andean's board is also subject to no parties trumping Goldcorp and an independent expert backing the deal.
Eldorado could not be contacted about whether it would make a higher bid. Andean has seemingly been in play for some time, after Eldorado chief executive Paul Wright said he had been talking to Andean's board for "approximately two years".
The acquisition would have added to Eldorado's $C2bn purchase of Sino Gold last year, as it seeks to become "the world's fastest growing gold producer".
Deutsche Bank analyst Brendan Fitzpatrick said the interest in Andean reflected the market's belief there was more resource potential at Cerro Negro in the ground than had been defined.
On further consolidation, he said corporate activity among the juniors and mid-caps was potentially on the cards.
"It could go either way," he said. "The smaller companies could amalgamate and fill that . . . gap between the large majors and the mid-tier names.
"(But) if you're looking at Newcrest, although they have the capacity for further acquisition, they don't necessarily require additional assets, given their growth profile, so amalgamation amongst the smaller names might seem the more likely."
Morgan Stanley strategist Gerard Minack said conditions "seem ripe" for corporate activity as cashflows rose and debt markets reopened. He also said equities, which were trading globally at 11 times 2011 earnings against an average of 15 times, were relatively cheap.
"Profits and returns are rising, rates are low, capital markets are reopening and . . . it may be easier to acquire additional sales than to generate them organically."