Goldcorp to buy Glamis for $8.6 billion

Mumbai: Goldcorp Inc, the Vancouver, US-based gold mining company, is acquiring Glamis Gold Ltd. in an all-stock deal worth $8.6 billion. The merger will create one of the world's largest gold mining companies. Post merger Goldcorp will have proven and probable reserves of 41.1 million ounces of gold.

"The combination of Goldcorp and Glamis will create a world class low-cost gold producer in the Americas with industry-leading growth from an exciting portfolio of development projects," Ian Telfer, president and chief executive officer of Goldcorp, said in a statement.

The share transfer formula has been fixed at one Glamis share for 1.69 shares of Goldcorp, representing a value of $51.49 per share based upon the closing price of Goldcorp on August 30. This represents a premium of 32.7 per cent to the closing price of Glamis' shares on August 30, and 34.8 per cent to the 20-day volume weighted average.

The transaction is expected to close in November. Once the transaction closes, Goldcorp's present shareholders will own 60 per cent of the new Goldcorp and Glamis shareholders will own 40 per cent. The deal, which has been cleared by the respective boards of the two companies, has to be approved by the shareholders.

Goldcorp is North America's third largest gold producer and is one of the world's lowest cost and fastest growing multi-million ounce gold producers with mining operations throughout the Americas and Australia.

Gold Corp saw its second quarter earnings in 2006 nearly double to $190 million from the previous year with operating cash flows of 240 million. Cash flows are expected to increase with its four recent mine acquisitions in Canada and Chile. The acquisition of these assets increases Goldcorp's current gold production by 50 per cent.