Canadian Gold Miners Agree to Deal Creating World's Biggest Producer
Posted on: Sunday, 25 December 2005, 09:00 CST
By ASSOCIATED PRESS
TORONTO -- Two rival Canadian companies agreed Thursday to combine in a sweetened $10.4-billion deal that will create the world's biggest gold miner.
Toronto-based Barrick Gold Corp., the world's No. 3 gold producer, agreed to acquire Vancouver-based Placer Dome, the world's sixth-largest, in a now-friendly deal that topped the previous offer of $9.2 billion.
"It creates a real powerhouse," Barrick President and Chief Executive Officer Greg Wilkins told The Associated Press in an interview. "It's a very good fit for the two companies with locations of our assets which gives us the opportunity to do a better job of driving down costs and increase our operating margins."
The new Barrick would have 150 million ounces of gold reserves, surpassing the world's current No. 1 gold company, U.S.-based Newmont Mining Corp., in reserves and production. It would have a market value of $24.5 billion.
On Oct. 31, Barrick made a hostile bid to buy its rival, a move that Placer's board rejected as being "inadequate" and "opportunistic."
Placer's board unanimously backed the new offer.
"This combination has the potential to deliver significant value to our shareholders in the near term and over time," Placer Dome Chief Executive Officer Peter Tomsett said.
Placer still has the right to consider superior offers, although Barrick holds the right to top those bids if it chooses.
But industry observers said it's likely a done deal.
"I think the fact that they've come in with a higher bid probably supersedes somebody coming in and looking at an even higher bid," said Salman Partners analyst Haytham Hodaly.
Barrick was able to boost its bid with support from its sidekick in the deal, Vancouver-based Goldcorp, which intends to buy some of Placer's assets from Barrick for $1.49 billion in cash.
Placer shareholders will get either $22.50 in cash or 0.8269 of a Barrick share plus 5 cents cash.
Source: Buffalo News
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