Goldcorp & Glamis Merger - Birth Of Third Largest Gold Mining Company
Goldcorp Inc is one of the most recognized brands in the gold mining industry. Based in Vancouver, British Columbia; Goldcorp Inc became the third largest gold mining company in the world. With the increase in cost and competition, it was inevitable for the two companies to create an entity that could stand up against these factors.
The executives of these two Canadian companies were earlier involved in bitter fights over other takeover deals. However, the merger of Glamis & Goldcorp has resulted in to the formation an entity worth $21.3 billion. The merger is an all-stock transaction deal. After the completion of the merger, the new company has retained the name of the Goldcorp Inc and its headquarters are based in Vancouver.
The shareholding pattern also makes the Goldcorp the majority stake owner in the new company. The Goldcorp shareholders hold 60% stocks of the newly merged company while 40% shares are with the Glamis shareholders. Under the deal, the Glamis shareholders will get 1.69 shares of the Goldcorp for every share of the Glamis Gold they have. All in all it is a very fruitful deal for the shareholders of both the companies. Glamis shareholders received a premium of 32% on their shares through this deal.
The executives of the two companies are of the view that this merger would equip the Goldcorp Inc to compete better with the other large multinational mining companies. They think it will work in the favor of the employees, customers and shareholders of the company creating more wealth and value. The annual gold production of the new company will be around three million ounces after the merger.
Kevin McArthur who was formerly the president and chief executive of the Glamis Gold Mining Company, will take over the same position in the newly formed entity. Although, all the investors and shareholders of the Goldcorp were not happy with the merger move, some even showed stiff resistance. But with their valuable reasons and long-term strategic vision behind the merger move the officials were able to convince their shareholders for the swift merger.
Before the deal, the Goldcorp was known for acquiring smaller gold mining companies with operating mines. This strategy of the Goldcorp used to increase its cash flow however, the merger with Glamis will be different that actually will reduce the cash flow for Goldcorp. With the completion of the current merger between Glamis and Goldcorp, Canada will become home to two of the biggest gold mining companies in the world. One is the Goldcorp Inc and other is the Barrick Gold Inc.
Merger is a great way to shield against the political, natural, environmental as well as economical uncertainties in the mining industry. It is even more risky when you are in the business of gold mining, understanding the need of the time Glamis and Goldcorp made a well thought and laid strategic merger. This merger will surely create more wealth and value in the future for its shareholders, employees and all other stakeholders.