Skip to main content

The Osisko mine in western Quebec has 10 million ounces of proven and probable reserves and produced nearly 500,000 ounces of gold in 2013.

Mathieu Dupuis/Osisko Mining

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.

Story continues below advertisement

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.

Story continues below advertisement

By the end of 2009, Goldcorp had made three merger offers to Osisko's management, which were all rejected.

(Osisko's stock was trading above $7.50 a share when Goldcorp made its offer in 2009. Goldcorp is now offering a total of $5.95 in cash and stock for every Osisko share.)

The Quebec miner cancelled a meeting and would not provide information as per their agreement, according to Goldcorp's filings. In 2012, Osisko asked Goldcorp to "re-engage with Osisko with the intention of completing a transaction."

But after the companies entered into a new confidentiality agreement, Osisko refused to provide Goldcorp with information.

The companies' on-again, off-again relationship culminated in September 2013 when Osisko's chief executive told Goldcorp that his company was supportive of pursuing a corporate transaction and would give Goldcorp access to all the relevant information.

The data Goldcorp requested was never provided and in November Osisko said its board of directors had decided not to proceed with merger discussions, according to the filings. Goldcorp called it five years of "frustrated attempts" to engage with Osisko.

Story continues below advertisement

On Monday, Goldcorp bypassed Osisko's board and made its offer directly to Osisko's shareholders.

Goldcorp's offer represents a 15-per-cent premium based on the companies' closing prices last Friday. A number of analysts believe Goldcorp has to sweeten its offer. Osisko's stock is up 20 per cent to $6.23 on the expectation of a higher bid.

Osisko has said it is considering the offer.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter