It is not just a rival bidder that Goldcorp has to consider. There is the possibility that Osisko shareholders simply say no.Mathieu Dupuis
Goldcorp Inc. would consider spinning off Osisko Mining Corp.'s exploration assets into a separate company as a way to sweeten its unsolicited offer for the smaller gold miner, people familiar with the matter said.
Montreal-based Osisko has rejected Goldcorp's $3-billion cash and stock offer and is courting a range of suitors for its large Canadian Malartic mine in Quebec.
With a spinoff, Osisko shareholders would not only get a stake in the much larger Goldcorp but also retain ownership in some assets with growth potential, such as Osisko's deposits in Ontario's Kirkland Lake area.
Getting a friendly deal would ensure that Goldcorp locks up an asset it has coveted for more than five years before Osisko signs up to sell to another bidder.
It is not just a rival bidder that Goldcorp has to consider. There is the possibility that Osisko shareholders simply say no.
"In the absence of a potentially higher offer price, we expect that Osisko shareholders may elect the "go-it-alone" route," analysts at Canaccord Genuity said in a recent report.
Time is running out for Osisko. Goldcorp will get access to Osisko's confidential data by April 1 and will be allowed to take up and pay for any shares tendered to its bid by mid-April if Osisko does not find a white knight.
Osisko's Canadian Malartic would give Goldcorp an additional nine million ounces of gold reserves. The mine has been in Goldcorp's chief executive Chuck Jeannes' sights since 2008.
In the past, Goldcorp has succeeded in buying companies and spinning off their non-core assets into separate entities.
When the company bought Virginia Gold Mines in 2005 it got the Eleonore gold project in Quebec and at the same time spun out Virginia's other assets into a smaller company.
Virginia's shareholders received a portion of Goldcorp's shares as well as a stake in the exploration company.
Goldcorp's Eleonore is expected to start producing later in 2014.
It is unclear how Goldcorp would value Osisko's other gold assets, which include deposits in Kirkland Lake, mineral properties in Hammond Reef and a project in Mexico.
Macquarie Equities Research values Osisko's non-core assets at about $1.32 per share.
Since Goldcorp launched its hostile bid mid-January, Osisko has signed numerous confidentiality agreements with its rivals. The company's stock is trading at $7.25 per share, higher than Goldcorp's offer of $6.44, based on current prices.
Osisko's chief executive Sean Roosen has said the value of his company is upwards of $10 per share. Mr. Roosen told The Globe and Mail last week that his company has more options now than it had in mid-February.
However, another mining company has not emerged with a higher offer.
Analysts have said it is unlikely that big gold producers like Barrick Gold Corp. and Kinross Gold Corp. would be able to mount a bid for Osisko when they are still paying the price for expensive acquisitions made during commodity boom.