Barrick Gold Buy Equinox Minerals for $7.8 Billion
Barrick Gold (NYSE:ABX) minted a $7.8 billion deal Monday to take over Equinox, scuttling an earlier bid by a Chinese company to acquire the Australian copper miner.
The C$8.15-a-share bid from Toronto-based Barrick Gold represents a 16% premium above the bid from China’s Minmetals. It also carries a 30% premium to Equinox’s closing price on February 25, the day before Equinox made an unsolicited bid to buy Lundin Mining. As part of the new transaction, Equinox has withdrawn its Lundin offer.
“We believe this offer is superior to the public proposal made by Minmetals in terms of certainty and value,” Equinox CEO Craig Williams said in a statement. “Given the immediate value creation opportunity, we are recommending our shareholders tender to the Barrick offer."
Barrick, which is already the world’s largest gold miner, plans to use the deal as a way to expand its exposure to copper. Equinox has 5.7 billion pounds of copper reserves, including 4.5 billion pounds of copper reserves at its Lumwana mine in Zambia.
Under the terms of the deal, which carries with it a $250 million termination fee, Barrick has the right to match any superior proposal. Barrick said it has sufficient cash and committed financing for the transaction.
“The acquisition of Equinox 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 CEO Aaron Regent said in a statement.
Barrick said the acquisition will add to its bottom line immediately.
Shares of Barrick eased 3.3% to $53.71 Monday, eating into the stock’s 4.6% 2011 gain.