Barrick Gold’s Major Acacia Acquisition Attacked by Hedge Fund

Barrick Gold

Last month, Barrick Gold (NYSE: GOLD) made news when it made a $285 million offer in stock to acquire a further 36.1 percent of Acacia Mining (LON: ACA) stock in a move to further cement their ownership of the London-listed miner.

Already owning 63.9 percent of the company, Barrick has recently come across some unexpected resistance in the form of one minority shareholders and hedge fund that is standing in its way.

Odey Asset Management has vowed to reject the current bid offered from Barrick and promises to further vote against any other offers the company proposes that aren’t open to negotiation. With the current proposal putting the smaller gold miner at a $787 million valuation, Odey is arguing that the stock is worth more than what Barrick is offering.

“Odey welcomes Barrick’s indicative offer for Acacia and sees a takeover by Barrick of Acacia as the only logical way forward for Barrick,” Odey wrote according to The Financial Times. “However, Odey gives written confirmation to Acacia that should Barrick make an opening firm offer, whether in the form of a bid or a scheme, that is in a form that is ‘best and final’ . . . then Odey commits to voting against such an opening firm offer under any circumstances.”

Nor is Odey the only shareholder that’s voting against the Barrick proposal. Acacia’s third-largest minority shareholder, Fidelity International, has said the same thing recently, arguing that Barrick’s offer is drastically underpriced.

Portfolio manager Alex Wright argued that Barrick’s own audited value of Acacia’s assets on its balance sheet is 44 percent higher than what they are offering in their $787 million deal.

The main reason why Barrick feels confident in giving such a discounted deal comes from the fact that Acacia has reached an impasse with the government of Tanzania, where the company’s assets are located.

Back in 2017, the government charged Acacia with a $190 billion tax bill for alleged tax evasion and money laundering, a charge the company declined. Since then, the Tanzanian government has refused Acacia from exporting its gold, with no end in sight. Barrick is hoping that it could lend its expertise and brand reputation to help in the situation through the takeover agreement.

While the minority shareholders argue that Barrick is attempting to exploit the current situation between Acacia and the Tanzanian government, it makes sense for the Canadian gold giant to give such a strategy a shot.

Shares of Barrick Gold increased up 0.9 percent on Friday when the news broke. Over the past month, Barrick has been doing well for itself, gaining over 10 percent in the past 30-days.

Barrick Gold Company Profile

Based in Toronto, Barrick Gold is one of the world’s largest gold producers, operating mines in North America, South America, Australia, and Africa. In 2018, the firm produced roughly 4.5 million attributable ounces of gold and more than 380 million pounds of copper.

Gold production will rise following the acquisition of Randgold at the end of 2018. As of Dec. 31, 2018, Barrick had 75 million ounces and 7.6 billion pounds of proven and probable gold and copper reserves, respectively, including recently acquired assets. – Warrior Trading News