GG Overpaying for GLG?

Eric Probstfield sent me the following thoughts after reading my comments regarding the GG/GLG merger and since he brought up some good points I thought I'd post them here and open them up for discussion.

1. What do you think after reading Eric's comments? Do you think that GG will be overpaying for GLG?
2. What do you think would have been a fair premium for the proposed transaction?

Let me know your opinion after reading Eric's comments by clicking the comments link below.

"I read your analysis, and you make some good points on your blog site. But I'd like to know your opinion on why this merger is a good idea now that we're using a ratio of 1.6 to 1 in favor of GLG when we (GG shareholders) voted down a merger with GLG a couple of years back with a ratio of 1.1 to 1, before we merged with Wheaton River. According to this, that would mean that the Wheaton River acquisition had a significant negative asset value. I am not aware of a significant change in the ratio of proven and probable resources between GG and GLG (except for the significant addition of resources in the WHT acquisition) during this time frame.I just don't get how we voted this merger down a couple of years ago, and now Tefler supposedly has so much support that only two shareholders disagreed? Something here just isn't passing the smell test. Well, I guess including me, take the total dissenters to 3.Can you help me understand how my logic is flawed?

I've been a long-time holder of GG, and have to confess, although the items that you point out are true, IMO, I don't think it justifies giving that much of a premium to GLG, especially considering the points above. I think GG can get to the same point by buying some much more reasonably valued juniors that are struggling due to poor management but have good assets, and they can do that without basically giving away almost 1/2 the company. We're paying a premium for the good mgmt in place at Glamis, and I don't understand why we want to do that when GG's management doesn't need any bolstering (or so I thought). We want cheap assets, especially any that we can utilize existing infrastructure that we have or another potential takeover target owns. I'd like to see the response and debate that would hopefully stir up if you posted this to your blog. I'd really like to hear some opinions that challenge the logic here, because so far I haven't heard any."

As an addendum, it was announced today that IAG will acquire CBJ for a 31% premium in a stock swap transaction, which premium is just a little less than the original premium in the proposed GG/GLG merger.