Today gold mining company Placer Dome Inc. said its board is recommending shareholders reject a $9.2 billion takeover bid by Barrick Gold Corp., calling the offer “inadequate” and “opportunistic.”
The recommendation may be in part due to interest in Placer Dome expressed by Denver-based Newmont Mining Corp., which has signed a secrecy agreement that allows it to review Placer Dome’s internal financial data, according to Dow Jones, citing an unnamed source. The source said that Newmont was one of several companies reviewing the information.
Toronto-based Barrick had offered last month to buy Placer Dome for cash and stock in a deal that would create the world’s largest gold producer. At the time, a Barrick spokesman called the bid a “friendly unsolicited offer.”
Among the reasons for recommending against the offer, Vancouver-based Placer said its own gold production is expected to increase while Barrick’s production is predicted to decrease by 2010; Barrick’s offer doesn’t reflect an adequate premium for control of Placer and the consideration offered represents a discount to the current trading price of Placer’s common shares.
“We believe Barrick’s offer is financially inadequate, opportunistic, and fails to recognize the value of Placer Dome’s assets and long-term growth profile,” said Placer Chairman Robert Franklin in a statement.
President and Chief Executive Peter Tomsett added, “It’s easy to see why Barrick needs Placer Dome, but it’s difficult to understand why Placer Dome should want Barrick.” In addition, Placer said it is evaluating a range of strategic options that could enhance shareholder value, including alternative transactions with third parties that have expressed an interest in a possible deal. The company said it is pursuing discussions with certain third parties.
Under the proposed deal, Placer Dome’s shareholders would get $20.50 in cash, or a combination of 0.7518 of a Barrick common share plus 5 cents in cash, for each Placer Dome share.
Placer Dome’s U.S. shares fell 17 cents to $21.73 in morning trading on the New York Stock Exchange, but is still close to its 52-week high of $22.75. Barrick Gold’s U.S. shares fell 35 cents to $27.46 on the NYSE.
