SHAREHOLDERS in Acacia Mining will be kept waiting until July 9 before knowing if Barrick Gold intends to advance the all-share takeover offer proposed in May after the UK’s Panel on Takeovers and Mergers agreed to an extension.
Barrick earlier requested the extension “… in order to facilitate further engagement with Acacia and its minority shareholders”. Acacia said that were the price offered by Barrick fair and were it supported by shareholders, a takeover comprised an “attractive solution”.
The transaction was mooted in order to overcome opposition the Tanzanian government has to settling a tax dispute regarding Acacia with Acacia and its management. Tanzania has blocked exports of gold in concentrate from Acacia mines for more than two years – events that has seen Acacia take the matter to the International Court of Arbitration.
Acacia could win big from the court – the impact of the export blockade has been estimated at $1.3bn – but this would first require rejecting Barrick, and sticking to a course of independence. But by taking control of Acacia shares – Barrick already owns 63.9% – it would free Barrick to deal directly with the Tanzanian government.
Cited by Reuters, Barclays said in a note on May 23 that a Barrick offer might be better than taking on the risk of seeking compensation from the International Court of Arbitration.
“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,” he told Reuters.
However, some shareholders have voiced their displeasure at Barrick’s indicative offer of 0.153 Barrick shares for each ordinary share of Acacia.
Fidelity International, the third-largest minority shareholder in Acacia and Barrick’s second-biggest investor, told Reuters last month that rejecting the bid was a “no brainer” and showed a lack of judgment on Barrick’s part.
Another shareholder, Odey Asset Management, announced last week that it would not accept a first and final offer for its stake. “Odey is not rejecting any specific level of firm offer,” the firm, a top 10 shareholder in Acacia, told Reuters. “Rather, Odey is preemptively committing to reject a specific style of opening firm offer,” it said.
A firm offer of this nature by Barrick would impair the ability of Acacia’s board to give a “robust response” that can effect any change, the fund said. Odey owns 1.94% of Acacia shares, said Reuters citing Refinitiv.
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.
If Barrick decides not to move ahead with its proposal, which is to buy the 36.1% of Acacia it does not own, it must walk away for at least six months in terms of 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.