Comparing the Goldcorp and Kinross takeovers (RTGAM)
Tim Kiladze
Goldcorp Inc.’s overnight bid for Andean Resources Ltd. came as a surprise to some people Friday morning, but its initial shock value didn’t match that of Kinross Gold Corp.’s $7.1-billion bid for Red Back Mining Inc. , which could be in trouble. (The lower shock could have something do with today being the Friday before a long weekend and some people have mentally checked out.)
With two major gold deals in a month, it makes sense to put the transactions side by side to compare metrics.
Location of Target's Major Asset(s):
Andean: Cerro Negro gold project in Argentina
Red Back: Gold mines in Ghana and Mauritania
Premium paid:
Andean: 35 per cent
Red Back: 21 per cent
Dilution to CFPS:
Goldcorp: Around 9 per cent in 2011, and 1 to 4 per cent for a few years after, according to Cormark Securities
Kinross: Around 20 per cent for the next three years, according to UBS Securities
Proven and probable gold reserves:
Andean: 2.5 million ounces
Red Back: 8.1 million ounces
Production after acquisition:
Goldcorp: Almost 4 million ounces by 2014, according to Bank of America Merrill Lynch
Kinross: Around 3.7 million ounces in 2015, according to National Bank Financial
Approvals:
Goldcorp/Andean: Both boards and Sentient Executive GP II, which owns 21 per cent of Andean
Kinross/Red Back: Both boards and 14 per cent of Red Back shareholders. But the deal has run into problems of late.
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