Gold rally narrows Acacia Mining, Barrick Gold offer gap ahead of deadline

Aion-Tech Solutions

17/06/2019 14:28

* Gold price rose to 14-month high last week
    * Big Acacia shareholders still oppose offer
    * Barrick must firm up offer by June 18

    By Nichola Saminather and Barbara Lewis
    TORONTO/LONDON, June 17 (Reuters) - Ahead of Tuesday's
deadline for Barrick Gold Corp  ABX.TO   GOLD.N  to make a firm
buyout bid for its Acacia Mining  ACAA.L  unit, a gold rally has
eroded, but not eliminated, a discount and big Acacia
shareholders say they still oppose the offer. 
    Barrick must either firm up its proposal to acquire the
36.1% of Acacia it does not own by June 18, or walk away for at
least six months under British takeover law.
    In the event opposition melts away and a friendly offer
materialises, 75% of the minority shareholders would have to
back it. If the bid is not friendly, 90% of the minority
shareholders would have to support it.
    A gold rally  XAU=  driven by trade and geopolitical
tensions propelled gold prices to a 14-month high last week, at
the same time boosting gold equities, such as Barrick and
Acacia.
    By around midday in London (1000 GMT) on Monday, taking into
account exchange rates, banking sources said the Barrick
indicative offer stood at a 2.1% discount to Acacia's share
price, compared with a 9% discount at the time of the offer on
May 22. urn:newsml:reuters.com:*:nL4N22Y1PE 
    Acacia investors said the continued, albeit narrowed,
premium of Acacia's share price to the bid since the offer
implies a better offer should be forthcoming.
    Investors have also noted that Barrick valued Acacia at
$1.36 billion in 2018. 
    Aberdeen Standard Investments, a passive investor in both
Acacia and Barrick, told Reuters Barrick's offer significantly
undervalued Acacia, joining disgruntled shareholders including
Fidelity International and Odey Asset Management.  urn:newsml:reuters.com:*:nL2N23K0QE
    Barrick's offer is an effort to resolve a two-year-long tax
dispute with the Tanzanian government and lift a concentrate
export ban, after Acacia was shut out of the negotiations.
 urn:newsml:reuters.com:*:nL3N20F3UA
    The Tanzanian government has said it will only deal with
Barrick.    
    Absent a successful bid or resolution to the dispute, Acacia
expects to proceed with an international arbitration hearing on
July 22, with an outcome expected by the end of the year.
 urn:newsml:reuters.com:*:nL8N2374MX
    Barrick Chief Executive Mark Bristow has said the offer
reflects the increased risk from Tanzania.  urn:newsml:reuters.com:*:nL5N23047V
    While Acacia has not disclosed the amount it would seek in
arbitration, the company can claim the value lost due to the
government's actions, estimated at $1.3 billion, Barclays
analysts wrote in a May 23 note, adding the risks to achieving
this are much higher than accepting Barrick's offer. 
    "If you’re holding Acacia stock, Barrick is offering you a
lifeline," said Joe Foster, portfolio manager at Van Eck
Associates Corporation, Barrick's third-biggest shareholder.  
"Why not take the Barrick shares, get the situation resolved,
and move on."

 (Reporting by Nichola Saminather in Toronto and Barbara Lewis
in London
Editing by Susan Thomas)
 ((Barbara.hm.Lewis@thomsonreuters.com; +44 207 542 2932;
Reuters Messaging:
barbara.hm.lewis.thomsonreuters.com@reuters.net))