Tanzania: Barrick Gold definitively takes control of Acacia Mining

For the Canadian mining giant, this was the end of a long and bitter battle. After two years of strained relations with the management of its Tanzanian subsidiary Acacia Mining and two months of stock market manoeuvres, Barrick Gold finally succeeded in taking full control of Acacia by buying back the 36% of its capital that it did not yet own.

Following the new takeover bid, made on July 19, Acacia Mining’s Board of Directors resolved to approve the terms of its majority shareholder, which already held a significant portion of the capital (64%). A symbolic victory for Barrick, who fought until the last minute: the new terms of the transaction were announced a few hours before the regulatory deadline so that Barrick could either make a final firm offer or withdraw completely.
To win the prize, the Canadian had to take out his checkbook. In addition to a significantly improved offer (a premium of more than 50% over its initial proposal in May), the Toronto firm has also committed to pay a special dividend of 9 pence per share to Acacia’s minority shareholders, ultimately valuing the entire acquired company at $1.2 billion. In this sense, Barrick Gold has taken into account the criticisms made so far by the holders of Acacia securities, some of whom describe the Canadian’s first redemption proposal as « ridiculous ». Acknowledging this new development, Acacia Mining immediately jumped 20% on the London Stock Exchange, its best daily performance in the last 9 years.

Acacia Mining’s price on the London Stock Exchange: the reaction of the markets after the announcement of the agreement.
Source : Bloomberg

With this stock market battle won, the way is now clear for a renewed relationship with the Tanzanian authorities, which had imposed on Acacia Mining the largest tax recovery in African history – $190 billion (!), subsequently reduced to… $300 million – and blocked its gold exports. A blocking situation that had led to the Tanzanian government’s refusal to deal with Acacia’s management, and pushed Barrick Gold to launch its takeover bid on the company to become the only authorized interlocutor.
« We congratulate both parties on the mutual agreement reached and look forward to Barrick’s official communication to chart the way forward, » said Tanzanian government spokesman Hassan Abbasi shortly after the announcement to buy Acacia Mining.