Barrick set to take full control of Acacia after raising bid

By Noor Zainab Hussain and Barbara Lewis

LONDON (Reuters) - Barrick Gold Corp has struck a deal to buy out fellow shareholders in Acacia Mining after raising its offer to end a two-month standoff between the world's second biggest gold miner and its African unit.

Acacia shares jumped about 20% in early Friday trading towards the offer price. The deal was announced hours before a regulatory deadline for Barrick to make a firm bid or walk away.

Barrick spun off Acacia in 2010, but still owns a 64% stake and said earlier this year it wanted to take back full control as it sought to resolve a protracted dispute between Acacia and Tanzania over valuable mining assets.

Barrick is now offering 0.168 of its own shares for every Acacia share, worth about 232 pence per share and valuing the whole of Acacia at 951 million pounds ($1.2 billion).

In addition, minority Acacia shareholders could get special dividends on Acacia exploration properties, which would add another 9 pence per share, making a total of 241 pence.

Barrick first made an offer to buy out other Acacia shareholders in May, worth 193 pence per share.

"It's a good deal, especially given the current situation in the country," Acacia's interim CEO Peter Geleta said in a telephone interview, referring to the company's long-running tax dispute with Tanzania.

"We think it's a good deal for all stakeholders,"

Geleta said the agreement represented a 53.5% premium to Acacia's share price at the time of Barrick's indicative offer in May, as well as a 24.3% premium to Acacia's closing price on Thursday.

Taking into account the special dividends, which depend on asset sales, it would be a 60% premium.

Barrick's offer in May triggered an angry response from minority Acacia shareholders who said it undervalued the company's mine plans and ignored the value of its exploration and development assets.

Acacia shares gain since Barrick's bid in May https://fingfx.thomsonreuters.com/gfx/mkt/12/3513/3487/acaa.png

TANZANIA TENSIONS

Relations between Barrick and Acacia have been strained for years, particularly after Acacia was hit with a $190 billion tax bill by Tanzania - later reduced to $300 million in a 2017 agreement - as Barrick took a lead in talks with the government.

Tanzania has piled on the pressure, threatening a ban at Acacia's North Mara mine from Saturday that could halt operations at the company's biggest revenue earner.

That threat remains in place and Geleta said he hoped a swift resolution could be agreed with Tanzania.

In a sign of its willingness for a deal, Acacia said on Wednesday it would seek a stay to international arbitration proceedings against Tanzania, which were meant to start on Monday.

The deal with Barrick will be "a good opportunity to rebuild relationships," Geleta said.

Another pressing issue is that two Acacia employees and one former employee have been in jail in Tanzania since October.

Tanzania's government was positive about the deal on Friday.

"We commend the two parties for the mutual agreement thus far. We will eagerly wait for official communication from Barrick to chart the way forward," Tanzania government spokesman Hassan Abbasi tweeted.

In a note, analysts at Panmure Gordon, which rates Acacia "hold", said they saw "a high probability" of the deal being completed and that it represented fair value for Acacia.

($1 = 0.7988 pounds)

(Additional reporting by Fumbuka Ng'wanakilala in Dar es Salaam and Muvija M and Yadarisa Shabong in Bengaluru; Editing by Saumyadeb Chakrabarty and Mark Potter)