Last week in this space we told our readers that two American companies have jumped into the frenzy created by news that WHEATON RIVER and IAMGOLD planned a merger. The merger would create a new, 1-million-oz/year producer to be named AXIOM GOLD CORP.
The merger looks like a perfect match to us. But there are some that would break up the union before it is blessed.
GOLDEN STAR RESOURCES of Denver wants control of IamGold and offered a 13% premium over the chare closing price on May 27. Not interested, said the board of the Toronto-based company. Golden Star went to the Ontario Superior Court to postpone a vote by IamGold shareholders on the proposed Wheaton River merger. The court ordered the vote delayed until June 29, rather than allowing it to take place as planned on June 8. That gives Coeur time to proceed with a hostile takeover.
Idaho-based COEUR D’ALENE MINES wants to buy up Wheaton River. Originally Coeur offered $4.50/share in cash and stock, and it has since upped the offer to $5.00/share. No thanks, said the Wheaton River board, the merger with IamGold still offers the best value for shareholders. The Vancouver-based company has just racked up its seventh consecutive profitable quarter.
Now the fur is flying. Golden Star says IamGold stockholders will benefit more from its offer than from a merger with Wheaton River. IamGold says the deal with Wheaton River is superior. Golden Star says Wheaton is lacking experienced management. IamGold says the opposite is true, and besides Golden Star is six months behind schedule at both the Bondaye expansion and the Wassa development. Coeur d’Alene says Wheaton River is too hasty in rejecting its proposal. The American company has appealed to the Ontario Teachers’ Pension Plan and other key stockholders to vote with their wallets, insisting that its offer is worth more per share. Wheaton River is saying simply that it "does not intend to pursue" the proposals from Coeur. Analysts have backed the American proposals rather than the Wheaton/IamGold merger.
So what is a shareholder to do? Balancing all the assertions and allegations is not easy. Coeur d’Alene (www.coeur.com), Golden Star (www.gsr.com), IamGold (www.iamgold.com) and Wheaton River (www.wheatonriver.com) all have posted presentations supporting their opinions. Wading through all that and making sense of it is no easy task.
Wheaton River investors seem to have made sense of it, voting 79% in favour of the merger with IamGold on June 8. Now they have to wait three more weeks until IamGold shareholders can vote. Meanwhile, Coeur d’Alene is "astounded" that the vote went ahead and is complaining that many votes in Coeur’s favour went uncounted.
As I wrote last week, for sentimental reasons I favour the Wheaton-IamGold merger. I want these successful Canadian companies to remain in Canadian hands. I have faith that the combined company will be greater than its parts and continue to grow.