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. Last Updated: 07/27/2016

Barrick Bids for Top Spot in Gold

TORONTO -- Barrick Gold has launched an unsolicited $9.2 billion bid on Monday for fellow Canadian gold producer Placer Dome in a deal that would create the world's biggest gold miner.

A successful takeover would catapult Barrick -- already Canada's biggest gold miner and the world's No. 3 -- ahead of U.S.-based Newmont Mining and South Africa's AngloGold Ashanti in world rankings. Placer is the world No. 5.

Barrick offered $20.50 a share for Placer, a 24 percent premium over the $16.51 New York closing share price of the Vancouver, British Columbia-based company on Friday.

Barrick chief executive Greg Wilkins characterized the offer as an "unsolicited friendly deal as opposed to a hostile bid," and said "we have a very solid bid on the table."

Placer, which first learned of the offer when Barrick notified Placer's chairman Monday morning, said its board of directors would meet to consider the deal.

Barrick has had merger discussions with Placer in the past, but Placer historically has been intent on maintaining its independence.

"Clearly, we would like to work with the Placer board to complete this transaction," said Wilkins, who said he had not had any discussions with Placer's shareholders.

Barrick's offer includes a $1.35 billion side deal with another Canadian gold miner, Goldcorp, to buy some Placer assets once the takeover is complete.

Goldcorp would buy Placer Dome's Campbell, Porcupine and Musselwhite gold mines in Ontario; the La Coipa silver mine in Chile; and a 40 percent stake in the Pueblo Viejo development project in the Dominican Republic.

"We have been warning that [Placer] would get taken over for quite a long time," said Patrick Chidley, an analyst at Barnard Jacobs Mellett.

"It's an asset-rich company. ... There are potentially other bidders, of course. Newmont must be looking at this, and in addition we think perhaps AngloGold may have a look," he said.

Haytham Hodaly, an analyst at Salman Partners called Barrick's quest for Placer an "opportunistic deal."

Haywood Securities analyst Kerry Smith called it a good deal for the three sets of shareholders. "The elegant part of this deal is the fact they brought Goldcorp in, and Goldcorp is prepared to take away the Ontario assets from Barrick once they close the transaction," Smith said. "Placer's board has to get out and beat the bushes. But at the end of the day I think they will have a tough time finding another bidder that would pay above this price."

AngloGold and Newmont both declined to comment on any potential competing bid for Placer.

Placer stock jumped $3.44, or 20 percent, to close at $19.95 on the New York Stock Exchange on Monday and rose 3.97 Canadian dollars to 23.46 Canadian dollars in Toronto. Barrick dropped $1.95 to $25.25 in New York and was off 2.03 Canadian dollars at 29.81 Canadian dollars in Toronto.

Barrick, which would stay headquartered in Toronto, said the combined company would have an estimated output of 8.3 million to 8.4 million ounces of gold for 2005 and about 370 million pounds of copper. Industry leader, Newmont, is seen producing 7.4 million ounces of gold this year.

"We are really setting out to take Barrick to the next level," Wilkins said. "The key is that we can deliver value from the assets, people and projects that Placer has in combination with Barrick's. ... We can build a powerhouse company."