Placer Dome Inc., Canada’s second-largest gold producer, urged shareholders to reject an $8.93 billion hostile takeover bid from bigger rival Barrick Gold Corp. Placer said it is seeking alternative transactions.
Barrick’s offer “is inadequate” and it “attempts to buy the company on the cheap,” Placer chief executive Peter Tomsett said Wednesday in a conference call with investors and analysts.
The market value of Vancouver, British Columbia- based Placer, based on Wednesday’s closing price, is $9.42 billion.
Placer’s mines and rising gold production are “way more valuable” than the shares offered by Toronto- based Barrick, which holds risky bets on bullion prices and may have declining output, Tomsett said.
Gold prices are rising near $500 an ounce and are the highest in almost 18 years. Acquiring Placer would make Barrick the world’s largest gold producer, ahead of Denver-based Newmont Mining Corp.
Tuesday, Newmont declined to discuss a Dow Jones Newswires report that it has signed a secrecy agreement to view Placer’s internal financial data.
The Barrick offer “is a little too low,” said Patrick Chidley of Barnard Jacobs Mellet USA LLC in Toronto. He rates Placer “overweight” and Barrick “underweight.” He doesn’t own shares in either company.
Placer can probably get 10 percent to 20 percent more than the initial offer, Chidley said.
Shares of Placer Dome fell 41 cents, or 1.6 percent, to $25.39 Canadian ($21.66 U.S.) at the 4 p.m. close of trading on the Toronto Stock Exchange. Barrick fell 82 cents, or 2.5 percent, to $31.83 Canadian ($27.15 U.S.), the biggest drop this month.
Placer will soon agree with “what we’ve been hearing from shareholders in the past few weeks, which is that it’s time for Placer Dome to be sold,” Barrick spokesman Vince Borg said.
Top gold producers
Newmont Mining Corp., Denver: 233 metric tons
AngloGold Ashanti, South Africa: 222.3 metric tons
Barrick Gold, Toronto: 171.4 metric tons
Gold Fields Ltd., South Africa: 130.5 metric tons
Placer Dome, Vancouver, British Columbia: 120.1 metric tons
Based on 2003 production figures, the most recent available
