Goldcorp to buy Glamis Gold for $8.6B

Goldcorp to buy Glamis Gold for $8.6B

Thursday, August 31st 2006

Canadian gold miner Goldcorp Inc. has agreed to buy Reno, Nevada-based rival Glamis Gold Ltd. for about $8.6 billion in stock in a deal that will create one of the world’s largest gold producers.

The new company will have proven and probable reserves of about 41.1 million ounces of gold with focused operations in the Americas and 11,000 employees.

Under the terms of the agreement, shareholders will get 1.69 common shares of Goldcorp for each Glamis common share. Based on Goldcorp’s closing share price on Wednesday, the offer values Glamis shares at $51.49 each, an almost 33 percent premium to the stock’s closing share price on Wednesday.

Goldcorp shareholders will own about 60 percent of the combined company, while Glamis shareholders will own the remainder. The deal is supported by the boards of both companies and is expected to close in November pending shareholder approval.

Ian Telfer, president and chief executive of Goldcorp, will become chairman of the new Goldcorp, while Kevin McArthur, president and chief executive of Glamis, will become president and chief executive officer of the new company, which will be based in Vancouver.

The deal creates one of the largest gold miners in Canada by market capitalization, behind Barrick Gold Corp. which is worth more than $28 billion.

Canada’s mining industry has seen several large mergers in recent months including the takeover of Falconbridge Ltd. by Swiss-based Xstrata PLC and the wooing of Inco Ltd. by multiple suitors including Teck Cominco Ltd., U.S.-based Phelps Dodge Corp. and Compania Vale do Rio Doce, or CVRD, of Brazil.

Last year, Goldcorp bulked up with the takeover of Wheaton River Minerals Ltd. and the $1.5 billion addition of several former Placer Dome mines earlier this year.

Goldcorp has operations in Canada, Argentina, Mexico, Brazil, Australia and the United States, and also owns a controlling interest in Silver Wheaton Corp.

Meanwhile, Glamis operates mines and development projects in Nevada, Mexico and Central America. In its outlook earlier this year, Goldcorp said gold production in 2006 was expected to be about 1.8 million ounces on an annualized basis. Glamis expects to produce more than 700,000 ounces of gold next year.

Glamis has agreed to pay a break-up fee to Goldcorp of $215 million if the deal is not completed under certain circumstances. Glamis has also provided Goldcorp with a right to match competing offers.

Share this post