With investors less than eager to tender to its original takeover offer, BARRICK GOLD stuffed a bit more green into PLACER DOME's Christmas stocking on Dec. 22.
That added green amounts to around US$116 million in cash, and is bolstered by some 30 million additional shares in Canada's biggest gold producer.
Under the sweetened bid, Placer shareholders are offered US$22.50 in cash or 0.8269 of a Barrick share plus a nickel for each Placer share tendered. The cash portion of the bid is capped at US$1.34 billion, while the scrip is limited to 333 million shares. In all, the bid is valued at US$10.4 billion on a fully diluted basis.
On a fully prorated basis, the offer amounts to US$2.91 per share in cash plus 0.7216 of Barrick share.
"It's very much about creating an enterprise that can be successful in a global industry with a number of challenges," said Barrick chief executive Greg Wilkins during a conference call with analysts after the announcement. "You need to have a company that has the strength, breadth and scale to be able to effectively capitalize on the opportunities.
"It really consolidates an unrivalled suite of projects and prospective exploration areas that will give us a growth profile well into the future."
Wilkins says the deal is immediately accretive to Barrick shareholders on a net asset value basis, and will begin to be accretive on an earnings-per-share and cash flow basis, beginning in 2007.
The revised offer also includes a larger cash contribution from GOLDCORP, which will chip in US$1.485 billion, up from the previous US$1.35 billion. In return, Goldcorp will pick up Placer's major Canadian assets, including the Campbell mine, adjacent to its flagship Red Lake gold mine in northwestern Ontario. Placer recently announced a down-dip extension of Red Lake's High Grade zone onto the Campbell mine property.
"We believe that the increased purchase price is justified as a result of recent increases in gold prices, the exploration success at Red Lake and additional synergies and tax efficiencies that we expect to arise from a friendly transaction," said Goldcorp chief executive Ian Telfer in a statement.
Barrick's original offer in October included US$20.50 a share in cash or 0.7518 of a Barrick share plus 5 a share, with the cash component limited to US$1.224 billion, and shares to 303 million. Placer dismissed the offer as inadequate and opportunistic, and urged shareholders to shun it.