Updated from 7:39 a.m.
surged 19% Monday after rival
unveiled a $9.2 billion unsolicited bid for its Canadian mining rival.
Toronto-based Barrick said it would pay $20.50 a share, 87% in stock and the rest in cash. It also set up a side deal with
in which Goldcorp will buy some Placer Dome subsidiaries and an interest in a development project for $1.35 billion in cash. Goldcorp said the deal would increase Goldcorp's annual gold production by approximately 50% to more than 2 million ounces at a total cash cost of less than US$150/oz. Proven and probable gold reserves would increase by 83%.
Monday afternoon, Placer Dome said its board "will be meeting to consider this unsolicited proposal, and will make a statement in due course." The company said it wouldn't make any further comment till then.
In the offer, Placer Dome's common shareholders will have the right to elect to receive $20.50 in cash or 0.7518 of a Barrick common share plus $0.05 in cash for each Placer Dome common share, subject to pro ration based upon the maximum amount of cash and Barrick common shares offered. The maximum amount of cash to be paid by Barrick will be approximately $1.224 billion, and the maximum number of Barrick common shares to be issued will be approximately 303 million, taking into account the conversion of Placer Dome's outstanding convertible debt securities and outstanding share options. Assuming full pro ration of these maximum amounts, this would result in $2.65 in cash and 0.6562 of a Barrick common share for each Placer Dome common share subject to the offer.
Barrick said many Barrick, Placer Dome and Goldcorp operating mines, development projects and exploration properties are in close proximity. The key operational synergies between Barrick and Placer Dome are international in scope: Nevada, Chile, Australia and Tanzania. For Goldcorp, the complementary assets are primarily in Ontario. As a result, total synergies from Barrick's acquisition of Placer Dome and the Barrick/Goldcorp agreement are estimated to be $240 million per year. Barrick currently expects to capture synergies of approximately $200 million a year, due to cost savings in operating and capital efficiencies, general administrative expenses, exploration, tax efficiencies, debt optimization and procurement practices.