A New Twist in the Pursuit of Osisko Mining

Osisko’s shares are surging. What will happen next?

| More on:
The Motley Fool

When Goldcorp (TSX: G)(NYSE: GG) made a hostile takeover offer for Osisko Mining (TSX: OSK) back in January, it looked like the bid would be successful.

With the M&A market so dry in gold mining, it looked like Osisko would have trouble finding another suitor. Various people (including yours truly) said that with Osisko trading at a premium to Goldcorp’s offer, investors should avoid Osisko’s shares. It was a gamble not worth taking.

Those predictions turned out to be false. Today Osisko announced that Yamana Gold (TSX: YRI)(NYSE: AUY) will be taking a 50% stake in Osisko in a deal that values Osisko at $7.60 per share. This is 10% above Osisko’s closing price last night, and 22% above the value of the Goldcorp offer. In response, Osisko shares are up 8%, trading around the $7.40 mark.

So what happens next?

A week ago, I wrote an article that gave various reasons why Goldcorp won’t raise its bid. One of those reasons was the fact that there were no competing offers. Now that there is one, Goldcorp may be tempted to up its offer.

But there are still plenty of reasons why Goldcorp won’t put in a competing bid. One of these reasons is the fact that Goldcorp likely has plenty of alternatives. Furthermore, Goldcorp is known to be very frugal, and likely will not want to enter a bidding war out of principle. And Osisko’s share price seems to reflect this reality. The company’s stock no longer trades at a premium to the latest offer price, which means investors are not counting on any more bids.

Foolish bottom line

At this point, Osisko’s shares are now trading based on the value off its actual operations, rather than speculation about more bids. So investors looking to bet on a rise in the gold price may want to consider holding shares of Osisko.

In the meantime, Osisko CEO Sean Roosen and his management team deserve a lot of credit for finding another buyer. They proved many people wrong, including me. And the company’s shareholders are undoubtedly thanking him for it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds no positions in any of the stocks mentioned in this article.

More on Investing

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Building a $50,000 Portfolio That Can Weather Any Market Storm

This defensive investment portfolio uses three ETFs to ride out any recession.

Read more »

Two seniors float in a pool.
Retirement

Want to Retire Rich? 3 TSX Stocks to Add to Your Portfolio Now

These TSX stocks could deliver above-average returns in the long run, helping you build wealth over time and retire rich.

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Top 3 TSX30 Winners: Understanding the Recent Stock Drop

Three TSX30 winners in 2024 have experienced price drops this year and continues to underperform due to massive headwinds.

Read more »

space ship model takes off
Dividend Stocks

Where to Put $12,000 in Today’s Market for Potential Long-Term Gains

There's no shortage of great investments that can provide potential long-term gains. Here's a look at three stellar options.

Read more »

Hand Protecting Senior Couple
Retirement

Avoid the OAS Clawback: Dividend Strategies Every Retiree Should Know

With a smart dividend strategy, the OAS clawback can be minimized or even avoided entirely for retirees. Here's how.

Read more »

Canadian dollars are printed
Dividend Stocks

How to Use $10,000 to Transform a TFSA Into a Cash Machine

Do you want growth and income? Consider these top investments that offer up monthly income in spades!

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Building a $28,000 TFSA Portfolio One Contribution at a Time

Let’s take a look at how you can turn a $28,000 investment in a TFSA into a life-changing fund for…

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Making Your $25,000 TFSA Investment Work Harder for the Long Term

This strategy reduces risk while still providing a solid return.

Read more »