Significant operational synergies
Research firm Sterne Agee published a report today focusing on Agnico Eagle Mines and discussing the ongoing Osisko Mining Corp. (TSE:OSK) (OTCMKTS:OSKFF) deal. Sterne Agee analysts Michael S. Dudas and Satyajeep Jain argue that getting involved in the Osisko deal is a natural fit for Agnico Eagle Mines Ltd (NYSE:AEM) (TSE:AEM). They first point out that lower gold prices and equity values make now is a good time to consider strategic acquisitions,
Second, Dudas and Jain argue that Osisko Mining Corp. (TSE:OSK) (OTCMKTS:OSKFF) is an ideal fit with Agnico. “Considering Agnico Eagle and Yamana’s expertise in developing and operating large open pits, we believe the operating teams of these two companies can further improve the mine’s operations. Also, given Agnico’s already strong presence in the Abitibi region of Quebec, we could see significant operational synergies from the acquisition of Canadian Malartic.”
Goldcorp could raise their bid for Osisko
Today’s news of the Agnico-Yamana offer is not necessarily the last chapter in the Osisko Mining Corp. (TSE:OSK) (OTCMKTS:OSKFF) saga. For starters, Goldcorp Inc. (NYSE:GG) (TSE:G)’s offer includes more cash, and, frankly, shareholders may prefer exposure to Goldcorp than Yamana. That said, according to Dudaa and Jain, unless Goldcorp comes up with a better offer, Agnico Eagle Mines Ltd (NYSE:AEM) (TSE:AEM) and Yamana will likely end u getting the votes they need to close the deal. Keep in mind that if Goldcorp upped its offer and won, it will have to pay Osisko’s C$195-million termination fee to Yamana Gold Inc. (NYSE:AUY) and Agnico.
Sterne Agee rates Agnico a Buy
The Sterne Agee analysts believe that Agnico is oversold currently, and rate the stock a Buy with a price target of $38.
