Canadian-based Barrick Gold Corporation has reached an agreement to buy out fellow shareholders in Acacia Mining, a deal that values the firm at $1.2 billion. This puts an end to a two-month deadlock between the largest gold mining company in the world and its Africa unit.
Prior to this agreement, Barrick owned a 64 percent stake in Acacia, which it spun off in 2010. But the parent firm said earlier this year it wanted to take back full control in a bid to resolve a longstanding dispute between Acacia and Tanzania over valuable mining assets.
Until earlier this month, Acacia had said that it is worth more than what Barrick’s earlier offer valued the company at. Barrick first made an offer to buy out other Acacia shareholders in May, worth 193 pence per share.
After a prolonged stalemate, Barrick raised the offer that would give it complete ownership of Acacia, bowing to minority shareholders. The final offer of 232 pence per share represents a 24.3 percent premium to Acacia’s closing price on Thursday. Also, Barrick will offer minority shareholders special dividends on Acacia exploration properties and deferred cash consideration dividends.
The agreement, which has won the backing of the Acacia board, was announced hours before a regulatory deadline for Barrick to make a firm bid or walk away.
“It’s a good deal, especially given the current situation in the country,” Acacia’s interim CEO Peter Geleta said, referring to the company’s long-running tax dispute with Tanzania. “We think it’s a good deal for all stakeholders.”
Relations between Barrick and Acacia have been strained for years, particularly after Acacia was hit with a $190 billion tax bill by Tanzania, which was later reduced to $300 million in a 2017 agreement. Consequently, Barrick started talks with the government on a takeover of the embattled subsidiary.
According to Barrick’s Chief Executive, Mark Bristow, taking full control was the only way to end the tax disagreement with Tanzania which has left the company unable to export gold ore from the East African country.
Tanzania has piled on the pressure, threatening a ban at Acacia’s North Mara mine from Saturday that could halt operations at the company’s biggest revenue earner. That threat remains in place and Geleta said he hoped a swift resolution could be agreed with Tanzania.