Acacia finally agrees to increased buyout offer from Barrick

20Jul 2019
The Guardian Reporter
The Guardian
Acacia finally agrees to increased buyout offer from Barrick

BARRICK Gold has raised an offer that would give it full control of Acacia Mining, bowing to minority shareholders as it tries to resolve a tax dispute with the Tanzanian government.

The higher offer, which values Acacia at £951m (US$1.1billion) and has won the backing of the company’s board, comes just days after Tanzania ordered Acacia to stop using a waste storage facility at its largest gold mine by this weekend.Mark Bristow, Barrick’s chief executive who has been a champion of zero-premium deals in the gold mining industry, said taking full control was the only way to end a two-year tax disagreement with Tanzania that has left the company unable to export gold ore from the African country.Barrick’s first offer in May for the almost 40 per cent of Acadia it does not already own was dismissed as too low by minority shareholders including Odey Asset Management, Fidelity and Legal & General.It was pitched at an 8 per cent discount to Acacia’s share price. As Acadia’s majority shareholder, Barrick has been leading discussions with the Tanzanian government, which has refused to deal directly with Acacia.It has offered to pay $300m to settle the tax claims and split future returns for the mine 50:50. The order to close a waste storage facility came days after Acacia was told its North Mara mine had to be investigated before it could export gold.Three of Acacia’s employees remain in jail in Tanzania awaiting charges for alleged corruption.

“Things have become significantly difficult in the country (Tanzania)*,” said Peter Geleta, chief executive of Acacia.“We need stability. The current situation is not sustainable.”“Everybody wants a solution, everybody has lost in this dispute and the government wants a solution now,” said Geleta.“I would assume Barrick would get a settlement pretty quickly once this deal has gone through.”Geleta said he would not be joining Barrick once the deal is completed. Analysts at Berenberg said: “We assume that the increased offer level will now be acceptable to the minority shareholders, and note that the Acacia directors have unanimously approved the acquisition.”The new offer of roughly 232p a share will see Barrick pay 0.168 of its stock, up from an earlier exchange ratio of 0.153, and is a premium of as much as 60 per cent.Under the deal, Acacia investors will also be entitled to a special dividend from the sale of exploration assets. Shares in Acacia rose 19 per cent in London trading on the back of the deal, which the companies anticipate will close in the fourth quarter.

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