The takeover battle for Osisko Mining intensified on Wednesday. A few days after Goldcorp (NYSE:GG) raised its initial offer for Osisko, a new deal has been announced under which Yamana Gold (NYSE:AUY) and Agnico-Eagle Mines (NYSE:AEM) will acquire Osisko in a friendly takeover. Unlike the previous offer from Yamana, which was seen as complex, the new offer is simple. Therefore, Osisko shareholders might favor the new deal. The key question is whether Goldcorp will come back with a fresh offer.

The new deal
Last week, Goldcorp had raised its offer to acquire Osisko after completing due diligence. Goldcorp's sweetened offer proposed 0.17 of a Goldcorp common share and C$2.92 in cash for each Osisko common share. The offer valued Osisko at C$7.65 per share, five cents more than what Yamana had offered.

Given the complex nature of Yamana's offer, Goldcorp's offer stood a better chance of getting approval from Osisko shareholders. However, on Wednesday, Osisko found a second "White Knight" to thwart Goldcorp's hostile takeover offer.

Yamana Gold and Agnico-Eagle Mines reached an agreement to acquire Osisko Mining for C$3.9 billion. Osisko shareholders have been offered C$1 billion in cash, C$2.3 billion worth of Yamana and Agnico-Eagle shares, and shares in New Osisko, which has an implied value of around C$575 million. The offer represents an 11% premium over Goldcorp's offer.

On completion of the transaction, Yamana and Agnico-Eagle will have control of the Canadian Malartic mine in Quebec. The New Osisko would receive royalty on the production from Canadian Malartic and Osisko's existing exploration properties. The newly created company will also hold some cash and exploration assets in Mexico.

For Agnico-Eagle, the deal will expand its operations in Quebec, where it already has a significant presence. Meanwhile, Yamana will be able to diversify its operations.

When compared to Yamana's previous offer, the new deal is simple and offers a significant premium to Osisko shareholders.

What will Goldcorp do?
Even before the new Osisko deal was announced, Goldcorp had raised the stakes by announcing that it would seek to replace the Board of Directors at Osisko with its own directors and officers at Osisko's annual meeting on May 20. The company said that it would nominate 11 people, including its CEO Chuck Jeannes, to the Osisko Board at the annual meeting.

The big question, though, is whether Goldcorp will once again raise its offer. I noted in a previous article that Goldcorp's counter-offer to Yamana was not very generous. The company's raised offer was only five cents above Yamana's offer, which gave it some room in case there was a counter-bid. However, Goldcorp will have to raise its offer considerably to even match the new deal between Yamana, Agnico-Eagle, and Osisko. Given that Goldcorp has time and again said that it will not overpay for Osisko, it might be reluctant to raise its offer again. It must be noted, however, that Goldcorp attaches significant value to the Canadian Malartic mine.

Gold mining sector heating up
It looks likely that the new Yamana/Agnico-Eagle offer will prevail over Goldcorp's hostile takeover offer. But whatever the final outcome, one thing is certain: The gold mining sector could see more deals in the coming months. With gold prices finding a floor and valuation much more attractive, big mining firms like Goldcorp will look to acquire assets like Canadian Malartic.

Acquisitions will be the key to growth for major mining firms, given that gold prices are expected to remain range-bound now that the Federal Reserve factor is out of the equation. So while Goldcorp may not succeed in the takeover battle for Osisko, the company will certainly be looking out for other attractive assets.