Agnico Eagle Mines Ltd.
) has entered into an agreement with
Yamana Gold Inc.
) and Osisko Mining Corporation, under which, Agnico Eagle and
Yamana will jointly acquire 100% of Osisko's issued and
outstanding common shares. Shares of Agnico Eagle fell around
8.8% in the trading session following the deal announcement.
Both the companies agreed to acquire Osisko for a total
consideration of about C$3.9 billion ($3.5 billion) or C$8.15
($7.42) per share. The purchase price represents an 11% premium
to the current implied value of
) recently announced revised bid for Osisko.
The offer consists of roughly C$1 billion in cash, around
C$2.33 billion in Agnico Eagle and Yamana shares, and shares of a
new company ("Spinco") with an implied value of roughly C$575
Per the agreement, Agnico Eagle and Yamana will each own 50%
of Osisko, and set up a joint committee to operate the Canadian
Malartic Mine in Quebec. Once the transaction is complete, Osisko
shareholders will own roughly 16.7% of Agnico Eagle and around
14.4% of Yamana. As part of the agreement, certain assets of
Osisko will be transferred to Spinco, the shares of which will be
distributed to Osisko shareholders.
The agreement is a strategic fit for both Agnico Eagle and
Yamana. The acquisition is expected to be accretive to Agnico
Eagle and will also improve its total cash cost and all-in
sustaining cost profiles. The company will also get access to
Canadian Malartic, the largest producing gold mine in Canada
which has the potential to produce an average of roughly 600,000
gold ounces per year for 14 years. Agnico Eagle will also optimze
the Canadian Malartic Mine plan.
Agnico Eagle will be able to manage its additional debt from
the acquisition due to strong cash flow generation from a larger
business. The company expects synergies from its other Abitibi
operations. Moreover, the advanced Kirkland Lake project will
enrich the company's portfolio.
Agnico Eagle currently retains a Zacks Rank #3 (Hold).
AngloGold Ashanti Ltd.
), which also belongs to the gold mining industry, retains a
Zacks Rank #1 (Strong Buy).
AGNICO EAGLE (AEM): Free Stock Analysis
ANGLOGOLD LTD (AU): Free Stock Analysis
YAMANA GOLD INC (AUY): Free Stock Analysis
GOLDCORP INC (GG): Free Stock Analysis Report
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