Goldcorp, the Canadian miner, is to buy its rival Glamis Gold for $8.6 billion (£4.5 billion) in a move that will promote the company into the top ten of gold producers.
The all-share deal will create a miner with a market capitalisation of about $21.3 billion. Its annual production, based on 2005 estimates by the precious metals analyst GFMS, will exceed 48 tonnes — placing it about eighth in the top ten list of gold producers.
The largest gold miner is Barrick, which bought Placer Dome last November for $9.2 billion. Barrick has an annual production of 280 tonnes based on GFMS 2005 estimates.
With the gold price topping $600 an ounce, mining companies are generating huge profits and the sector is undergoing a wave of consolidation.
The Goldcorp offer, which has been backed by both boards, effectively values Glamis at $51.49 a share, nearly a 33 per cent premium on Wednesday’s closing price.