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Barrick Gold to buy Equinox for C$7.3bn
By Bernard Simon in Toronto
Published: April 25 2011 13:25 | Last updated: April 25 2011 13:25
Barrick Gold, has signalled a dramatic expansion of its ambitions in the global mining industry by announcing an agreed C$7.3bn ($7.66bn) cash offer for Equinox Minerals, the Australian-Canadian copper miner.
Equinox is already the target of a hostile offer by China’s Minmetals Resources, unveiled earlier this month. Barrick has offered C$8.15 a share, compared with Minmetals’ C$7 per share offer.
Barrick is the world’s biggest gold producer but, according to a person close to the company, has taken the view that it needs to diversify in order to join the ranks of the world’s biggest mining companies, such as BHP Billiton and Rio Tinto.
Aaron Regent, Barrick’s chief executive, said in a statement on Monday morning that the acquisition “would add a high-quality, long-life asset to our portfolio and is consistent with our strategy of increasing gold and copper reserves through exploration and acquisitions”.
Barrick already produces significant quantities of copper at the Zaldivar mine in Chile, with extra production due to come on stream from its Cerro Casale project, also in Chile.
Craig Williams, Equinox’s chief executive, said the Barrick offer “is superior to the public proposal made by Minmetals in terms of certainty and value”.
Minmetals ranks among China’s largest metals traders and has been one of the bolder Chinese miners in terms of overseas deals. However, Barrick is hoping that Minmetals will be reluctant to take part in a protracted global takeover fight, according to one person familiar with its thinking.
In addition, Barrick is optimistic that its bid stands a better chance of gaining Canadian government approval than a deal involving the Chinese.
The deal with Equinox would be the biggest of the 17 acquisitions that Barrick has made since its inception as a small Ontario oil and gas exploration company in the early 1980s, when it was acquired by Peter Munk. Mr Munk, 83, is still Barrick’s chairman.
Barrick said it had sufficient cash and committed financing in place to fund the acquisition, including a US$5bn bridge loan and revolving credit facility underwritten by RBC Capital Markets and Morgan Stanley.
Equinox has agreed to pay Barrick a C$250m termination fee if it accepts a superior proposal from another bidder. Barrick said that it has already acquired a stake of about 2 per cent in Equinox.
Equinox, listed in Toronto and Sydney, operates a copper mine in Zambia and is to invest in a copper-gold operation in Saudi Arabia. While fighting off the Minmetals bid, Equinox has been in the throes of making its own offer for Vancouver-based Lundin Mining, whose main asset is a minority stake in the big Tenke Fungurume copper deposit in Congo.
Equinox said on Monday that it was dropping its bid for Lundin.
Copyright The Financial Times Limited 2011.
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