Glamis bids for Goldcorp

Glamis Gold (GLG-T) has launched a hostile, all-share bid for Goldcorp (G-T), contigent upon the latter scrapping its own all-share, friendly takeover of Wheaton River Minerals (WRM-T), announced early last week.

Glamis is offering Goldcorp shareholders 0.89 of a Glamis common share for each Goldcorp common share.

The offer values Goldcorp at US$17.80 per common share (about C$21.77) and represents a premium of 22.6% based on the volume-weighted average trading price for both companies for the previous 30 trading days on the New York Stock Exchange.

However, late in the day of the bid (Dec. 16), Glamis shares had fallen about 6% to US$17.95 (C$22.15) while Goldcorp was up around 10-11% to US$15.37 (C$19.00).

With almost 189 million Goldcorp shares outstanding, Glamis’ bid thus values the company at US$2.6 billion (C$3.2 billion). The offer is contingent upon two-thirds of Goldcorp’s shares being tendered.

By comparison, Goldcorp and Wheaton had planned to merge by handing Wheaton shareholders one Goldcorp share for each Wheaton share held — about a 7% over Wheaton’s average price in the past month, or a value of $4.29 per Wheaton share.

The Glamis-Goldcorp deal would create a pure gold play, and Glamis management believes they can improve operations at the Red Lake mine somewhat, even thouigh Glamis is only experienced as an open-pit gold miner.

Glamis has been reviewing Goldcorp’s assets for a year or so, and had and already made the same bid to an independent Goldcorp committee in the week of November 22nd. That offer was declined by Goldcorp’s board of directors, and the Wheaton deal was unveiled on Dec. 5.

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