Goldcorp to acquire Glamis for $8.6bn

NEW YORK: Vancouver-Based Goldcorp agreed on Thursday to acquire Glamis Gold for about $8.6bn in stock to create one of the world’s largest gold mining companies. Glamis’ shareholders will receive 1.69 shares of Goldcorp for each share of Glamis, representing a value of $51.49 per share based on the closing price of Goldcorp on August 30. The companies said the merger was “a $21.3bn transaction”.

Glamis, however, has about 166.6m shares outstanding, giving the proposed deal a price of about $8.6bn. Goldcorp was not available to explain the $21.3bn figure. The companies said this represents a premium of 32.7% to Glamis’ closing share price on August 30.

Goldcorp, North America’s No 3 gold producer before Thursday’s deal, and Glamis, a Reno, Nevada-based mid-tier gold miner, said the new Goldcorp will have proven and probable reserves of 41.1m ounces of gold.

“The combination of Goldcorp and Glamis will create a world class, low-cost gold producer in the Americas with industry-leading growth from an exciting portfolio of development projects,” said Ian Telfer, president and CEO of Goldcorp. Goldcorp has operations throughout the Americas and Australia.

Glamis has gold mines and development projects in Nevada, Mexico and Central America. The new company will continue under the name Goldcorp. After the transaction, expected to close in November, current Goldcorp shareholders will own 60% of the new Goldcorp and current Glamis shareholders will own 40%.

The deal has been approved by the boards of Goldcorp and Glamis but is subject to approval by 66.6% of Glamis shares voted at a special meeting called to approve the deal.

Glamis has agreed to pay a break fee to Goldcorp under certain circumstances of $215m. Glamis has also given Goldcorp a right to match any competing offers. Goldcorp CEO Ian Telfer will become chairman of the new Goldcorp. Kevin McArthur, president and CEO of Glamis, will become president and CEO of the new Goldcorp.

The board of the new Goldcorp will have 10 members; six from the board of Goldcorp and four from the board of Glamis.Goldcorp’s financial advisers are Merrill Lynch Canada and CIBC World Markets. Glamis’ financial advisers are Orion Securities Inc. and JP Morgan Securities.