Goldcorp agrees to buy Sandy-based Andean Resources for $3.42B

TORONTO — Canada's Goldcorp Inc. said Friday it has agreed to buy Sandy-based Andean Resources Ltd. for about $3.42 billion, trumping a rival bid from Eldorado Gold Corp.

The acquisition would give Goldcorp, the world's second-largest gold producer by market capitalization, access to Andean's Cerro Negro gold project in Argentina, which is said to have a significant amount of gold and silver.

The Goldcorp-Andean deal has been approved by both companies' boards but requires approval by a majority of Andean shareholders. The companies expect the deal to close later this year or in early 2011.

The announcement came shortly after Canada's Eldorado made an offer of $3.2 billion for the company.

Andean is based in Utah and is listed on the Toronto and Australian stock markets. It acquired the Cerro Negro gold deposit in southern Argentina in 2004.

Chuck Jeannes, Goldcorp's president and CEO, said the deal represents a 34 percent premium to Andean's closing price Thursday.

Wayne Hubert, Andean's CEO, said the Goldcorp deal benefits both companies and allows for the development of Cerro Negro into a key gold project.

He said the board unanimously concluded the timing was right for Goldcorp "to take up the baton at this point and develop an exceptional project into a world-class mine we know it will become."

Under terms of the Goldcorp deal, each Andean common share will be exchanged for 0.14 Goldcorp shares or a cash payment in the amount of $6.17 per share.

The maximum cash consideration will be $948.6 million.

Shareholders can choose stock, cash or a combination of the two.

Steven Green of TD Securities said Goldcorp's offer looks expensive based on recent transactions but likely reflects the high-grade nature of the deposit and the presence of at least two bidders.

Goldcorp's U.S. shares fell 96 cents, or 2.2 percent, to $42.84 Friday.

Moody's Investors Service on Friday affirmed its foreign currency issuer rating on Goldcorp, expressing confidence in the company's ability to handle the deal.

Moody's said Goldcorp's earnings and operating cash flow were tracking strongly through June 30, with expectations of a comparable profile for the second half of the year.