December 6, 2023

DealBook: Barrick Gold to Buy Equinox Minerals for $7.8 Billion

As prices for commodities keep climbing, the Barrick Gold Corporation said on Monday that it had agreed to acquire Equinox Minerals for 7.3 billion Canadian dollars, or $7.8 billion.

The all-cash offer values Equinox Minerals, which is listed in Toronto and Sydney, at 8.15 Canadian dollars a share, 30 percent above the price it shares were trading at on Feb. 25, the last trading day before the company announced an unsolicited bid for the Lundin Mining Corporation. The Equinox board has unanimously approved the Barrick Gold deal and withdrawn its offer for Lundin.

“The acquisition of Equinox would add a high-quality, long-life asset to our portfolio, and is consistent with our strategy of increasing gold and copper reserves through exploration and acquisitions,” Aaron Regent, chief executive of Barrick Gold, said in a statement.

The Barrick bid is also at a 16 percent premium to a $6.2 billion proposal by the Chinese miner Minmetals earlier this month, which Equinox said was a “lowball price.” Though Minmetals announced its plans for an unsolicited offer — rare for Chinese companies — no formal bid was made, and it is unknown whether it will engage in a bidding war. A spokesperson for Minmetals was not immediately available for comment.

Craig Williams, head of Equinox, said in a statement that the Barrick offer was “superior to the public proposal made by Minmetals in terms of certainty and value.”

The deal comes amid a boom in commodities. Gold recently reached a new high of $1,518 an ounce, with other metals appreciating, too.

The environment has encouraged dealmakers. The materials sector, which includes mining, saw $133 billion worth of mergers and acquisitions worldwide so far this year, more than double the amount of $57.5 billion for the same period in 2010, according to Thomson Reuters data.

With the acquisition of Equinox, Barrick will build out its presence in copper, adding to its interests in Chile. Equinox is one of the top 20 copper miners in the world. At full capacity, its Lumwana project near the Zambian copperbelt is expected to account for 20 percent of the country’s production of the metal.

Barrick Gold, which is set to report first-quarter results on Wednesday, saw earnings rise 57 percent in the fourth quarter, compared with the period a year earlier. In the last year, its share price has jumped 33 percent.

The company will finance the acquisition with a bridge loan and credit facility worth $5 billion from Royal Bank of Canada and Morgan Stanley. The financing will supplement the company’s existing $1.5 billion loan facility and its $4 billion in cash reserves.

The tender offer, which will start Tuesday and run for at least 35 days, and is conditional on Barrick obtaining two-thirds of all outstanding Equinox shares, including the 2 percent Barrick already owns.

Morgan Stanley and Royal Bank of Canada advised Barrick, while Ogilvy Renault, Sullivan Cromwell and Clayton Utz served as legal advisers. Equinox Minerals employed CIBC World Markets, Goldman Sachs and TD Securities as advisers and Hoskin Harcourt as legal counsel.

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