Goldcorp Inc.s decision to drop its C$3.2 billion ($2.9 billion) hostile bid for Osisko Mining Corp. in the face of a rival offer shows the industry has found new discipline after years of value-destroying deals, BlackRock Inc.s Catherine Raw said.
Goldcorps decision not to raise its bid does show a sign of discipline, Raw, co-manager of BlackRocks $7.5 billion World Mining Fund, said today at the Bloomberg Industries and CME Group Precious Metals Forum in London. There is more discipline then we have seen previously.
Goldcorp, which was seeking control of Osiskos Canadian Malartic gold mine in Quebec, dropped its bid last month after Canadian competitors Yamana Gold Inc. and Agnico Eagle Mines Ltd. reached a friendly takeover deal. Goldcorp, based in Vancouver, had said it was determined to remain disciplined in how much it would spend.
Gold-mining companies have been rebuked by investors for deals in recent years that have led to billions of dollars of writedowns. Raw said that while Agnico may have paid too much, the company had a greater need to add future production than Goldcorp.
Goldcorp, the worlds largest gold producer by market value, sparked a bidding war with its Jan. 13 bid for Osisko, a proposal that was rejected as too low. Osisko ran a search for alternatives and announced April 2 that Yamana had agreed to buy 50 percent of Osiskos assets. After Goldcorp responded a week later by raising its own bid, Agnico joined Yamana in a friendly transaction to buy the whole of Osisko.
Deals have been hugely value-destructive, Raw said. I dont want to get rid of M&A. Its what you pay for it and how you pay for it thats important.