Goldcorp Inc. made an unsolicited $2.6-billion takeover offer for Osisko Mining Corp. and its Canadian Malartic mine in northern Quebec on Monday.
The offer sent Osisko shares soaring more than 20 per cent or $1.07 to $6.24, well above the offer price as investors speculated that a rival offer could be made.
Goldcorp chief executive Chuck Jeannes said the proposal was not about making his company bigger.
"Our strategy has never been about size, it's been about getting better and delivering disciplined and sustainable growth," Jeannes told a conference call with financial analysts.
He noted that Canadian Malartic would rank among Goldcorp's best mines if the deal is successful.
Jeannes said Goldcorp's own Eleonore project in northern Quebec is due to begin production later this year and the acquisition of Osisko would provide an opportunity for some cost savings.
Gold stocks were beaten down last year as the price of gold fell from its record highs and Osisko was no exception.
The stock has traded at a fraction of its highs of more than $15 reached in 2010. Osisko shares ended last week at $5.17 per share.
Vancouver-based Goldcorp is offering a combination of stock and cash that it values at $5.95 per share -- about 15 per cent Friday's closing price.
Under the offer, Osisko shareholders will be entitled to receive 0.146 of a Goldcorp common share plus C$2.26 in cash per share.
Osisko hasn't commented publicly on whether its board supports the takeover offer, which is being made directly to Osisko shareholders.
Goldcorp and Osisko are not strangers to each other.
Goldcorp sold its 10.1 per cent stake in Osisko in 2011 for $13.75 per share for a total of about $530 million.
Jeannes said the decision to sell the stake was based on valuation.
"Based on the way the market was acting, we saw value in selling them," he said Monday.
"From our perspective it has always been just about adding value and these prices and this point in the development of the company and the asset, we see a value proposition for not only our shareholders but Osisko's as well."
The acquisition of a company with assets in Canada follows a trouble filled year for miners with operations scattered around the globe.
Goldcorp took a hit last year from a writedown at its Penasquito mine in Mexico following a ruling by an agrarian court in Mexico regarding a land rights dispute at the project that nullified a lease on 600 hectares of land at the project.
The company also suspended exploration and deferred certain development plans at its Cerro Negro project in Argentina amid permitting delays, an unsustainable foreign exchange rate and uncertainty with respect to provincial taxation demands.
In addition to Canadian Malarctic in Quebec's Abitibi gold belt, Osisko owns the Hammond Reef gold project near Thunder Bay, Ont., and land holdings near Kirkland Lake, Ont.
