Suddenly, there’s now only one bidder for Andean Resources, diminishing the market’s belief that an auction might be happening for the gold miner.
Andean had been under bid from Eldorado Gold and Goldcorp, both of Canada, which had put bids of more than $3 billion on the table for Andean.
The companies were pursuing Andean for its emerging gold and silver Cerro Negro mining project in Argentina.
Eldorado president and chief executive Paul Wright said in a statement yesterday that the company had chosen not to proceed with its acquisition proposal, even though the company’s bid had received "broad support" from Andean’s minority shareholders.
"Extensive dissatisfaction exists among Andean shareholders as result of the Board of Andean choosing to focus on the agenda of a single large shareholder rather than the interests and desires of its broader shareholder registry," Mr Wright said in the statement.
"Our own shareholders believe strongly in this vision as well, however have appropriately expressed a note of caution in terms of Eldorado entering a value destroying auction whose main result will be the enrichment of short term market participants.
"The gold industry, as a whole, has an appalling track record of value destruction and Eldorado has no intention of following in these unfortunate footsteps.
"For these reasons and at this time, Eldorado has elected not to pursue the acquisition of Andean Resources any further,” Mr Wright added.
Andean said last week it had agreed to be taken over by Goldcorp Inc, and the transaction received the tick of approval from Andean’s largest shareholder Sentient Executive GP II.
Andean CEO Wayne Hubert said his company hasn’t received other proposals and will study any fresh bid.
Eldorado’s decision to withdraw knocked Andean shares down sharply yesterday.
Andean shares closed off 7.5%, or 53c, at $6.51.
Some punters still hope that industry majors like Barrick or Newmont might appear to keep the auction going.
Salt Lake City-based Andean is dual-listed on the Toronto Stock Exchange and in Australia and is about 90% owned by foreign investors.
The offer and the boost to Andean’s share price will be welcomed by those who took part in the company’s $C234 million capital raising in July at $C3.35.
Eldorado’s offer is $C6.50 cash or shares.
