Goldcorp And Glamis to Merge

The boards of Vancouver’s Goldcorp and Reno’s Glamis Gold gave a go–ahead to the proposed friendly merger between the two. The combination valued at US$21.3 billion will create the world's fifth-biggest bullion producer. The new Goldcorp would continue to be based in Vancouver.

The union of the two companies will create a behemoth with proven and probable reserves of 41.1 million ounces of gold and a resource base of 14 million ounces of measured and indicated resources. However all these gold reserves and production for both companies are unhedged.

Under the scheme of the merger, Glamis’s shareholders would exchange each Glamis share for 1.69 shares of Goldcorp, representing a value of US$51.49 a share. After completion of the transaction, Goldcorp shareholders will own 60% and current Glamis shareholders 40% of the new company.

Kevin McArthur, president and chief executive of Glamis, said about the benefits of the merger, "The things I like the most are the management and people synergies that we'll be putting into place, putting teams together to outperform…..You can't put a number on those, but those are the things that we look most forward to."

Goldcorp President and CEO, Ian Telfer said, “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.”

Post merger, Goldcorp would have a huge presence as operations in Canada, Argentina, Mexico, Brazil, Australia and the United States, and also owns a controlling interest in Silver Wheaton Corp. On the other hand, Glamis operates mines and development projects in Nevada, Mexico and Central America.

The management of Goldcorp has been bitten by the ‘the bigger is better syndrome’.