Dec. 5 (Bloomberg) -- Goldcorp Inc., Canada's fourth-largest gold producer, agreed to buy Wheaton River Minerals Ltd. for C$2.59 billion ($2.17 billion) in stock to gain mines outside North America and a chief executive to succeed Robert McEwen.
Wheaton River investors will receive one Goldcorp share for every four shares held, the companies said today. That values Wheaton River at about C$4.29 a share, or almost 14 percent more than its closing price Dec. 3 on the Toronto Stock Exchange.
The combination ends Goldcorp's search to replace McEwen, 54, who said in September he planned to step down, and gives Wheaton River the partner it has sought since a previous merger fell through in July. Wheaton River's Ian Telfer, 58, will become CEO of Goldcorp and McEwen will be chairman.
``The question was a matter of succession,'' McEwen said in a telephone interview. ``Wheaton has a very entrepreneurial management team and Ian's had a great track record.''
Together, the companies will produce more than 1.1 million ounces of gold in 2005, Toronto-based Goldcorp said. That leaves Goldcorp still short of Kinross Gold Corp., which is Canada's third-biggest gold miner and expects to produce about 1.7 million ounces next year. Barrick Gold Corp. ranks No. 1 in Canada with production of more than 5 million ounces.
Addressing Issues
Wheaton River's plan to merge with Iamgold Corp. and trump Goldcorp as Canada's No. 4 gold producer was thwarted when Coeur d'Alene Mines Corp. mounted a hostile offer in May. Coeur d'Alene's bid failed and Iamgold found a new merger partner in Gold Fields Ltd., leaving Vancouver-based Wheaton River alone.
``This bid is good for Wheaton River shareholders,'' said David Baker, who helps manage $500 million in resources stocks at Baker Steel Capital Managers LLP in Sydney and doesn't own shares of either company. ``I doubt anyone else will make a bid.''
McEwen said the acquisition is attractive because it gives Goldcorp a way to boost output and reserves and diversify its production base without any increase in costs. Following the purchase, Goldcorp said its cash production costs will decline to less than $60 an ounce, the lowest of any company with output of at least 1 million ounces a year, from about $120 now.
Selling to Goldcorp will reduce Wheaton River's reliance on copper, which the company mines together with gold, and give it a foothold in North America. Wheaton River's main assets are in Argentina, Mexico and Australia. Goldcorp's biggest mine is in northern Ontario and it also produces in South Dakota.
``By combining the two companies we've addressed the issues in both,'' McEwen said.
February Completion
Wheaton River holders would swap 570.3 million shares of common stock. The company also has 22.5 million stock options that will be exchanged.
Goldcorp shares rose 10 cents to C$17.15 in Toronto Stock Exchange trading on Dec. 3. Wheaton River rose 6 cents, or 1.6 percent to C$3.76.
McEwen said Goldcorp wants to complete the deal by February. Goldcorp needs two-thirds of Wheaton River's shares tendered to go ahead with the purchase.
Goldcorp hired GMP Securities Ltd. as financial adviser and Fraser Milner Casgrain LLP for legal work. Wheaton River's financial adviser was Merrill Lynch & Co. Its legal adviser was Davies Ward Phillips & Vineberg LLP. |
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