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Mining industry

Barrick Gold Corp. Offers to Acquire Placer Dome Inc. for $20.50 per Share

Strategic Insights

— 1 min read

Barrick Gold Corp. has made a bid to acquire Placer Dome Inc. by offering $20.50 per share, a move that has been met with skepticism by the board of directors at Placer Dome. The board believes that the offer "fails to provide full value for the Placer Dome assets and common shares" and is an attempt to acquire the company without adequately compensating its shareholders. Despite the offer, the board has recommended that shareholders reject it, citing several reasons, including the strategic value of Placer Dome's assets, the expected increase in Placer Dome's gold production, and the uncertainty surrounding the value of the consideration being offered.

Key Takeaways:

  • Barrick Gold Corp. has offered to acquire Placer Dome Inc. for $20.50 per share, with shareholders having the option of receiving 0.7518 of a Barrick share plus 5 cents for each share held.
  • Placer Dome's board of directors has rejected the offer, citing concerns that it fails to provide adequate value for the company's assets and shareholders.
  • The board believes that the Barrick offer is opportunistic and disadvantageous to Placer Dome shareholders.
  • Placer Dome's gold production is expected to increase, while Barrick's gold production is expected to decrease by 2010.
  • The value of the consideration being offered under the Barrick deal is uncertain and highly dependent on the value of Barrick shares.
  • The Barrick offer is highly conditional and not a permitted bid under Placer Dome's rights plan.
  • A full discussion of Placer Dome's reasons for rejecting the offer is included in a Directors' Circular being filed on November 23, 2005.
  • As of November 19, 2005, Comtex SmarTrend Alert had indicated an uptrend signal for ABX on November 17, 2005, and October 31, 2005, for PDG.

Statistics:

  • The offer price of $20.50 per share represents a specific value for the acquisition.
  • Placer Dome last traded at $21.69 in New York on the day of the announcement.
  • The consideration being offered includes 0.7518 of a Barrick share plus 5 cents for each share held, making the total value uncertain and dependent on Barrick share value.
  • Comtex SmarTrend Alert had indicated an uptrend for ABX on November 17, 2005, at $26.98, and for PDG on October 31, 2005, at $19.67.

Sources:

  • Dow Jones Commodities News via Comtex, November 23, 2005
  • Comtex News Network, Inc., November 19, 2005
  • Dow Jones Newswires, November 23, 2005

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