Barrick Gold Corp (NYSE:GOLD) indicated on Tuesday that it had made an offer to purchase all of Acacia Mining’s (OTCMKTS:ABGLF) stock that is not under them in a share for share transaction. The transaction will involve exchange of each Acacia ordinary share for 0.153 shares of Barrick.
Acquisition of Acacia shares
Barrick owns majority of Acacia shares and the proposal estimates the value of the company at $787 million with minority shareholders holding around $285 million of the shares that Barrick wants to acquire. However the deal could be revised if the company decides to pay dividends.
In a statement Barrick Gold stated that the company has been in discussions in the last two years with the government of Tanzania trying to reach a compromise on a tax issue to enable Acacia to continue operating in Tanzania.
At the beginning of the month Barrick Gold CEO Mark Bristow stated in a presentation that Acacia Mining was not ready to work with Barrick in the process of trying to reach an agreement leaving Barrick on its own. On the other hand Acacia’s Interim CEO has since criticised Barrick Gold citing early intervention.
Acacia accused of Tax fraud in Tanzania
Tanzanian authorities have accused Acacia of tax evasion in the past whereby they have been under declaring their exports. As a result of the tax dispute Acacia’s mining licences were cancelled and the Barrick subsidiary was accused of underreporting copper and gold mining.
Barrick has been in discussions with Tanzanian authorities on behalf of their subsidiary whom the government is not ready to negotiate with directly. Although a basis for settling has been established it is yet far from being finalised.
The subsidiary that split from Barrick Gold in 2010 and the UK authorities have been investigating it over allegations that its employees were involved in a bribery scam with Tanzanian officials.
Barrick Gold has up to June 18 according to UK rules announce a deal or declare that it won’t be making an offer.
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