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Barrick Gold seeks bid support from Acacia investors

18 June 2019



Barrick Gold has called on minority shareholders to support its proposed bid for Acacia Mining, warning of a “catastrophic” loss of value if they oppose the deal.The Canadian-listed miner said its all-stock offer was the only credible way to end a bitter dispute with the government of Tanzania over unpaid taxes that has crippled Acacia’s operations and hammered its share price.


“Barrick believes that unless a solution is found to the current impasse in the short term there is the real risk of catastrophic loss of value for all stakeholders, and that the solution it has proposed . . . represents the only credible option to preserve . . . the value of Acacia’s assets,” it said.

Barrick’s statement came after it was given an extra three weeks by UK regulators to persuade minority shareholders to back its proposed offer and make a formal bid. The previous deadline was set to expire on Tuesday.


Barrick’s proposal values Acacia at about £717m ($900m), or 175p a share, a slight premium to the closing share price of 173p.Acacia has been unable to export gold-bearing ore from Tanzania, where it operates three mines, since March 2017 when it shares were trading at above 500p.Barrick, which spun off Acacia in 2010 but retained a 63.9 per cent stake, has been trying to reach an agreement with the president of Tanzania, John Magufuli. However, it says the government is not prepared to enter into a settlement directly with Acacia.


In an interview with the Financial Times, Mark Bristow, Barrick chief executive, defended the buyout proposal. He said Barrick’s offer was based on extensive due diligence.“We have now in some detail explained how we came to our numbers,” said Mr Bristow, adding that Acacia’s plans for its mines were not appropriately risked or supportable. He also said Barrick would take a “material” impairment to the $1.36bn value of its Acacia stake in the current quarter.


Mr Bristow refused to say whether Barrick would increase its offer. For an offer to be successful it needs support from 75 per cent of Acacia’s minority shareholders.Acacia’s board said it could recommend a bid from Barrick provided it was pitched at the right level. “Subject to the price offered being fair and commanding the necessary support from shareholders, Barrick acquiring the remaining shares in Acacia it does not currently own would be an attractive solution for key stakeholders,” it said.


Several of Acacia’s minority shareholders, which include Fidelity and Odey Asset Management, have said they are opposed to the offer. They say it is opportunistic and undervalues Acacia.However, if Barrick walks away analysts says Acacia will be forced to settle its dispute with Tanzania through arbitration, which could be a long drawn-out process with no guarantee of success.Mr Bristow said the situation at Acacia was “critical” and it did not have the time to fight the government of Tanzania through the courts.