BARRICK Gold Corp has struck a deal to buy out fellow shareholders in Acacia Mining after raising its offer to end a two-month standoff between the world’s second biggest gold miner and its African unit.
The deal was announced hours before a regulatory deadline for Barrick to make a firm bid or walk away.
Barrick spun off Acacia in 2010, but still owns 262,246,950 Acacia shares, representing about 63.9 per cent of the issued ordinary share capital of Acacia.
It said earlier this year that it wanted to take back full control as it sought to resolve a protracted dispute between Acacia and the government over valuable mining assets.
Barrick is now offering 0.168 of its own shares for every Acacia share worth about 232 pence per share and valuing the whole of Acacia at £951m ($1.2bn).
In addition, minority Acacia shareholders could get special dividends on Acacia exploration properties, which would add another 9 pence per share, making a total of 241 pence.
Barrick first made an offer to buy out other Acacia shareholders in May, worth 193 pence per share. “It’s a good deal, especially given the current situation in the country,” Acacia’s interim CEO Peter Geleta said in a telephone interview, referring to the company’s long-running tax dispute with Tanzania.
“We think it’s a good deal for all stakeholders.”Geleta said the agreement represented a 53.5 per cent premium to Acacia’s share price at the time of Barrick’s indicative offer in May, as well as a 24.3 per cent premium to Acacia’s closing price on Thursday.
Taking into account special dividends, which depend on asset sales, it would be a 60 per cent premium.
Barrick’s offer in May triggered an angry response from minority Acacia shareholders, who said it undervalued the company’s mine plans and ignored the value of its exploration and development assets.
Acacia Mining was at loggerheads with the government after it was banned from exporting gold and copper concentrates, having been accused of tax evasion.
The government later handed the miner a $190bn tax bill. In a 2017 meeting between Tanzanian President John Magufuli and Barrick Executive Chairman John Thornton, it was tentatively agreed that Acacia would pay $300m to the government to settle tax claims and would split future returns from operations with the country.
At the time, Acacia criticised the move and blamed Barrick for its worsening relationship with Tanzania after Mr Thornton took over negotiations. The government commended the two parties for reaching the buyout agreement.
“We commend the two parties for the mutual agreement thus far. We eagerly wait for official communication from Barrick to chart the way forward,” government spokesman, Dr Hassan Abbasi tweeted.
In a note, analysts at Panmure Gordon, which rates Acacia “hold”, said they saw “a high probability” of the deal being completed and that it represented fair value for Acacia.