Skip to main content

The Globe and Mail

Why a rival bid for Richfield Ventures isn't likely

New Gold Inc.'s takeover bid for Richfield Ventures Corp. immediately raises the question of whether another bid will be forthcoming, especially as takeover fever is running high in the resource sector.

Michael Fowler, a veteran analyst now with Loewen, Ondaatje, McCutcheon Ltd., has some advice: Don't count on it.

Mr. Fowler describes the New Gold takeover as "a bold and pre-emptive action" and one that is likely to succeed.

Story continues below advertisement

One of the reasons is because most companies normally want to see some form of a scoping study done first before launching an acquisition attempt.

But Richfield's exploration efforts are still at a very early stage. It has delineated a net resource of 3.8 million ounces at its Blackwater project in central British Columbia, and production is likely about four years away.

New Gold is offering 0.9217 of a New Gold share for each Richfield share held. That values Richfield at $10.38 per share, or $550-million, representing a 31-per-cent premium to Richfield's closing price on April 1. Based on the resource estimate, New Gold would be paying $145 per ounce, which Mr. Fowler notes isn't all that outrageous these days.

Another reason to believe the bidding is done: As Tim Kiladze points out in Streetwise, Richfield executives admitted in a conference call today that they had signed some confidentiality agreements in the past year so that other companies could do their due diligence. Ultimately the board liked New Gold's interest the most.

Upside: Mr. Fowler recommends Richfield shareholders tender to the offer, and raised his price target to $10 per share.

"The pieces are in place" for FirstService Corp. to enter its next stage of growth, CIBC World Markets Inc. analyst Stephanie Price declared after meeting with executives of the global property manager. She's encouraged after hearing that the commercial real estate environment continues to improve, debt financing is coming back and leasing activity is strong in many markets.

Upside: Ms. Price raised her price target to $44.50 from $36.50.

Story continues below advertisement

Pacific Rubiales Energy Corp. and Ecopetrol have agreed to carry out a pilot project using Synchronized Thermal Additional Recovery technology. If successful, this technology could increase recoveries at the Rubiales and Quifa fields in Colombia, noted CIBC World Markets Inc. analyst Ian Macqueen. Meanwhile, Pacific Rubiales has agreed to acquire a 50- per-cent stake in five exploration blocks in the country from Maurel & Prom of France.

Upside: Mr. Macqueen raised his 12- to 18-month price target to $36 from $33.50.

Mosaic Co. reported adjusted earnings per share of $1.15 in its fiscal third quarter, versus the Street forecast of $1.08. Lower-than-expected costs associated with its phosphate production, and a better tax rate, bolstered the quarter's performance, said CIBC World Markets Inc. analyst Jacob Bout.

Upside: Mr. Bout raised his price target by $5 (U.S.) to $85 but maintained his "sector performer" rating.

Pfizer Inc. has completed the sale of Capsugel unit, the world's largest maker of hard capsules, to KKR & Co. for $2.375-billion (U.S.) and will use the proceeds to increase share buybacks. The sale represents a "solid" price, said UBS analyst Marc Goodman, who believes deploying the cash this way is a smart use of resources.

Upside: Mr. Goodman raised his 12-month price target by $2 to $23 (U.S.) and maintained a "buy" rating.

Story continues below advertisement

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to