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Five years of thwarted efforts to negotiate a friendly deal with Osisko Mining Corp. pushed Vancouver-based Goldcorp Inc. to launch a hostile $2.6-billion bid for its smaller rival this week.
According to Goldcorp’s formal bid filings on Tuesday, the miner describes how Montreal-based Osisko repeatedly rejected offers to merge and refused to provide key information after the companies signed a confidentiality agreement in the summer of 2008.
Calls to Osisko requesting comment were not returned. Goldcorp chief executive Chuck Jeannes has wanted to get his hands on Osisko’s giant Canadian Malartic mine in Quebec since 2008, when he was in charge of finding new projects as Goldcorp’s executive vice-president of corporate development.
In September of 2008, both Goldcorp and Osisko’s shares were volatile amid fallout from the U.S. housing crisis. Osisko, whose stock dropped as low as $1.86 a share, asked Goldcorp whether it would buy a small stake in the miner.
The much bigger Goldcorp, which was trading above $30 a share, agreed and a month later started talking to Osisko about acquiring the rest of the miner’s shares. But after Goldcorp presented Osisko with an offer letter in November, Osisko said no.
That was the first of many rejections for the Vancouver-based mining company.
Over five years, Goldcorp tried to pursue a merger with Osisko while it was developing its Canadian Malartic project.
The mine, which contains 10.1 million ounces of gold reserves, poured its first gold in April of 2011 and is now in commercial production. It is expected to produce more than 500,000 ounces a year over the mine’s 16-year life and is currently one of Canada’s largest gold mines.
By the end of 2009, Goldcorp had made three merger offers to Osisko’s management, which were all rejected.
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