Glamis, Goldcorp trade promises

Both Glamis Gold (GLG-T) and Goldcorp (G-T) have sweetened the proposed deal for Goldcorp shareholders in the battle of two takeover deals, as the clock runs down on a critical shareholder vote on Feb. 10.

Glamis is now offering 0.92 of a Glamis share for one of Goldcorp, up from a trade ratio of 0.89 in the original offer announced on Dec. 16. Glamis said the change represented a 61 (US49) addition to its bid, based on Glamis’s closing share price on Feb. 4.

Glamis said the formal bid would be mailed out on Feb. 9, requiring it to extend its deadline for tendering shares to the bid to Feb. 24 from Feb. 14.

Goldcorp replied with a special dividend of US50 (63) payable to Goldcorp shareholders on the condition that its bid for Wheaton River Minerals (WRM-T) is approved by shareholders in a meeting on Feb. 10. The bid for Wheaton, offering 0.25 Goldcorp shares for one Wheaton share, expires the following day.

The dividend would go to shareholders of record on Feb. 16, after the vote and the deadline for Wheaton shareholders to tender shares to the bid, but before Wheaton shares were traded for Goldcorp shares.

Glamis, which has sought proxies from Goldcorp shareholders to vote against Goldcorp’s offer for Wheaton, evidently raised its bid in the hope of catching support from shareholders that had not delivered proxies to Glamis. Its own offer for Goldcorp is conditional on the abandonment of the Wheaton plan.

Glamis needed proxies from Goldcorp shareholders by the end of business on Feb. 7, but proxies submitted to Goldcorp management with the instruction to vote against the merger proposal could be submitted as late as the morning of Feb. 8.

The increase in Glamis’s offer came on the heels of recommendations from at least two institutional proxy advisers, Fairvest and Glass Lewis, that Goldcorp shareholders vote for the Wheaton merger. The Ontario Teachers’ Pension Fund also announced it would vote its Goldcorp shares in favour of the merger.

Both Goldcorp and Wheaton said the dividend, which would cost about US$95 million, would have “no material impact” on the finances of the merged companies. The merged company would have about US$365 million in cash, and the payout would flip retained earnings into a US$21-million deficit from a US$74-million surplus.

Glamis characterized the dividend promise as “desperation” and said it would not increase its offer further.