March 3, 2014 / 4:34 PM / 4 years ago

UPDATE 1-Osisko settles suit with Goldcorp over takeover bid

(Adds details of the settlement, background, Goldcorp CEO comment, share price move)

By Euan Rocha

March 3 (Reuters) - Osisko Mining Corp has settled a lawsuit it filed against Goldcorp Inc in reaction to Goldcorp’s hostile takeover bid for the Canadian gold miner, a move that might lead to a negotiated deal or buy Osisko time to find a white knight.

Montreal-based Osisko sued Goldcorp, one of the world’s biggest gold miners, in January to try to foil the C$2.6 billion ($2.35 billion) takeover bid, but it said on Monday it has agreed to terminate the lawsuit.

As part of the agreement, Vancouver-based Goldcorp has agreed not to take up and pay for shares that were deposited in favor of its bid before April 15.

In return, Osisko has agreed to waive its so-called poison pill, or shareholder rights, plan by April 15, or earlier if it is able to find an alternative suitor ahead of that date.

As part of the deal, which was negotiated by lawyers for the two sides late on Sunday, Osisko has also agreed to give Goldcorp access to its books to do any necessary due diligence on the company by April 1, or earlier, if a rival bidder emerges.

Osisko said it is continuing to aggressively pursue a range of value-maximizing alternatives that are in the best interest of its shareholders and other stakeholders. It cautioned however, that there is no guarantee that an alternative deal will be reached.

“I am pleased that the shareholders of both companies will finally have certainty regarding the timing of the offer,” said Goldcorp Chief Executive Chuck Jeannes in a separate release. “This agreement will avoid the possibility of further delays in the completion of our offer that could have arisen from appeals of the pending litigation.”

Goldcorp launched the unsolicited cash-and-stock bid in January to gain control of Osisko’s Malartic gold mine in the province of Quebec.

Osisko, which has so far advised its shareholders to reject the offer, has dubbed the bid as “opportunistic and financially inadequate.” In January, it sued Goldcorp, alleging that its suitor misused confidential information.

Osisko said on Monday its board continues to recommend that its shareholders reject the Goldcorp offer.

Shares in both Osisko and Goldcorp were up sharply on Monday along with those of other gold miners, as the price of gold - often viewed as a safe haven investment - rose amid escalating tensions between Ukraine and Russia.

Spot gold rose above $1,352 an ounce on Monday, its loftiest since Oct. 30. The price of the precious metal is headed for its biggest daily gain since Jan. 23.

Shares in Goldcorp were up 2.9 percent at C$30.63 on the Toronto Stock Exchange, while those in Osisko were up 6 percent at C$7.47.

$1=$1.11 Canadian Additional reporting Ashutosh Pandey in Bangalore; Editing by Kirti Pandey; and Peter Galloway

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