Canada’s Eldorado Gold pulls bid to buy Andean Resources after Goldcorp trumps price

Canada’s Eldorado Gold pulls Andean bid

TORONTO — Canada’s Eldorado Gold Corp. said Tuesday it has withdrawn its bid to buy Andean Resources Ltd. after being trumped by a rival offer from Goldcorp Inc.

Eldorado Chief Executive Officer Paul Wright said Tuesday that the company didn’t want to get into a “value destroying auction” and said Andean’s Cerro Negro gold project in Argentina is a “good to have” asset, not a “need to have asset.”

Canada’s Goldcorp Inc. said Friday that it agreed to buy Andean for about 3.6 billion Canadian dollars ($3.42 billion). The announcement came shortly after Eldorado made an offer of 3.4 billion Canadian dollars ($3.2 billion) for the company.

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

Eldorado had been looking at buying Andean for the past two years and had taken its offer to shareholders after the companies failed to reach an agreement.

“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,” Wright said.

Wright criticized Andean’s board for choosing “to focus on the agenda of a single large shareholder rather than the interests and desires of its broader shareholder registry.” He did not name the shareholder, though private equity firm The Sentient Group is the largest, with a 20 percent stake.

Nicholas Mead, a spokesman for The Sentient Group, declined to comment.

Shares of Andean closed down 59 cents Canadian, or more than 8 percent, to $6.39 Canadian in afternoon trading on the Toronto Stock Exchange after Eldorado pulled its bid and ended what was expected to be a bidding war.

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.

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. Eldorado, Goldcorp and others took note of Andean in June after the release of promising drill results at Cerro Negro.

Earlier this year, Goldcorp also beat out Barrick Gold Corp., the world’s largest gold producer, when it bought a controlling interest in the El Morro gold-copper project in Chile from junior miner New Gold Inc.

Andean’s Cerro Negro gold project has indicated resources of 2.54 million ounces of gold and 23.56 million ounces of silver.

Andean spokeswoman Krista Muhr and Goldcorp spokesman Jeff Wilhoit declined to respond to Eldorado’s announcement or comments.