Barrick Plans to Mop Up Rest of Acacia to End Tanzania Pain

(Bloomberg) -- Barrick Gold Corp. is proposing to buy the shares of Acacia Mining Plc it doesn’t already own at a discount, arguing that the plan offers a route to end the unit’s crippling dispute with Tanzania’s government.

The $285 million proposal made to Acacia’s board and management will offer 0.153 of Barrick shares for each Acacia share, the Toronto-based company -- which already owns about two-thirds of the target, said in a statement.

The proposal implies a valuation of $787 million for the whole of Acacia, Barrick said. That’s below the company’s current $832 million market capitalization, according to data compiled by Bloomberg. Acacia said it’s considering the proposal and will also seek to clarify the position of Tanzania’s government.

Barrick’s Chief Executive Officer Mark Bristow -- who took the post in January and assumed oversight of talks with Tanzania on Acacia -- has previously criticized peers for offering large premiums, and in February made a hostile nil-premium offer for Newmont Mining Corp., which was later withdrawn.

Acacia shares fell as much as 8.4% in London trading on Wednesday. The stock has tumbled since 2017, when Tanzania banned the export of unprocessed metals, then presented the company with a $190 billion tax bill, equivalent to two centuries of revenue. Earlier this month, Bristow flagged Barrick may need to intervene to “force” agreement on a final settlement.

Barrick Plans to Mop Up Rest of Acacia to End Tanzania Pain

For almost two years, Barrick has been leading negotiations with the government, first under Executive Chairman John Thornton and, more recently, under Bristow. In meetings with Barrick in recent days, Tanzania’s government indicated “it is not prepared to enter into a settlement directly with Acacia,” the larger producer said in its statement.

“A basis for a settlement has been developed but not finalized, in meetings this weekend,” Barrick said. A framework deal previously struck in 2017 had proposed Acacia should pay $300 million to settle the tax claims and agree to split returns from operations with the country going forward.

Barrick’s offer “reflects fair value,” as well as its experience leading the negotiations and other due diligence, the producer said.

The proposal is subject to conditions including the recommendation of Acacia’s board, Barrick said. Relations between the companies appeared to have worsened this month, when Acacia CEO Peter Geleta pushed back against Barrick’s criticism over the lack progress in efforts to reach a settlement.

“Acacia notes that it continues to be excluded from the discussions between Barrick and the government of Tanzania,” the company said in a statement on Wednesday. “In the meantime, Acacia shareholders are strongly advised to take no further action.”

Barrick has until June 18 to decide if it will make a firm intention to make an offer, the company said.

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