TORONTO (Reuters) - Goldcorp Inc (G.TO) said on Monday it is walking away from its hostile bid to buy Osisko Mining Corp (OSK.TO), clearing the way for Yamana Gold Inc (YRI.TO) and Agnico Eagle Mines Ltd (AEM.TO) to take control of Osisko's flagship Canadian Malartic mine.
The white-knight bid, which the companies valued at C$3.9 billion ($3.5 billion) when it was announced last week, would see Yamana and Agnico take joint control of most Osisko assets, and spin out some exploration properties into a new entity.
The battle for Osisko, which came after a string of disappointing acquisitions and a plunge in the price of gold brought mining deals to a near-standstill, underlined the shortage of top-class gold assets in politically stable jurisdictions.
Canadian Malartic, located in Quebec, reached commercial production in May 2011. In 2013 it produced 475,277 ounces.
Vancouver-based Goldcorp said in a brief statement it would not raise its bid for Montreal-based Osisko and would let the offer expire on April 22.
"We stated from the beginning of this process that we would remain disciplined with respect to our offer to acquire Osisko, and our decision not to amend the offer is consistent with that commitment," Goldcorp Chief Executive Chuck Jeannes said in the statement.
Goldcorp Chairman Ian Telfer told Reuters in March that the miner would rather walk away from the bid than overpay.
Toronto-based Yamana has mines in Brazil, Mexico, Chile and Argentina, and Canadian Malartic would be its first major asset in Canada. Agnico already has extensive operations in Quebec. The deal would likely improve its production and cost profile.
For each share they own, Osisko investors are set to receive
C$2.09 in cash, 0.26471 of a Yamana common share, 0.07264 of an Agnico Eagle common share, and one share of the new Osisko, which the companies estimated would be worth C$1.20.
Shares of Yamana were down 5.3 percent at C$8.30 on Monday afternoon, and Agnico was off 5.3 percent at C$29.61. Osisko shares were down 5.9 percent at C$7.53.
Editing by Paul Simao and Matthew Lewis