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Acacia Mining agrees to Barrick Gold's raised takeover offer

London — The boards of UK-based Acacia Mining and Canadian Barrick Gold have agreed to Barrick's offer to purchase the 36.1% Acacia shares it doesn't already hold, Acacia said in a statement Friday.

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Acacia and Barrick agreed the terms of the takeover to be 0.168 per Barrick share for each Acacia share, 10% above Barrick's initial offer of 0.153 per share, Acacia said.

"We previously wrote that an increased exchange ratio would be the most sensible outcome for both the minority holders and Barrick," Berenberg research analyst Michael Stoner said in a note Friday. "We assume that the increased offer level will now be acceptable to the minority shareholders, and note that the Acacia directors have unanimously approved the acquisition." Acacia said under "the terms of the Share for Share Exchange Ratio imply a value of approximately 232 pence per Acacia Share, total consideration of approximately GBP343 million ($428 million) for Acacia minority shareholders and a total value of approximately GBP951 million ($1.2 billion) for Acacia." "The indicative valuation for Acacia is a step up from the 146 pence we estimated using prevailing spot rates on the date of the initial announcement," analysts at investment bank Jefferies Group said in a note Friday. "While the increase in the exchange ratio is a clear positive, the more significant increase in the valuation is from a +41% increase in Barrick shares over the same period."

Related story: Barrick Gold bid for minority shares in Acacia best solution for all stakeholders

BALANCING CIRCUMSTANCES

"While the offer is below the independent valuation of 271 pence per Acacia share, and below our upside valuation of 332 pence per share, such valuations have to be balanced against the ever-challenging circumstances that Acacia is facing in Tanzania," Investec Securities mining analyst Hunter Hillcoat said in a note Friday.

"This includes the recently emerged threat that Acacia's key operating asset, North Mara, could be shut down on the basis of alleged environmental considerations," Hillcoat said.

Stoner said that, given Acacia's North Mara mine "makes up 70% of the group's 2019 production guidance, this news would have a serious impact on its financial position." "Barrick will undertake a process to sell off Acacia's portfolio of exploration assets, proceeds of which will be paid to Acacia shareholders via special dividends," Jefferies Group said. "Value ascribed to the 'excluded assets' reflected in the exchange ratio amounts to just $10 million." Hillcoat said the "acceptance of Barrick's offer will enable Barrick to move forward in dealing with the demands of the Government of Tanzania (GoT) and progress in optimising the Tanzanian assets."

-- Filip Warwick, filip.warwick@spglobal.com

-- Edited by James Leech, james.leech@spglobal.com