Barrick buys Homestake - 500 Beiträge pro Seite

[Gulliver]

Barrick Gold to Buy Homestake Mining for C$3.5 Bln in Stock
By Joe Schneider


Toronto, June 25 (Bloomberg) -- Barrick Gold Corp. agreed to buy Homestake Mining Co. for C$3.5 billion ($2.3 billion) in stock to create the world`s No. 2 gold producer.

Barrick will pay 0.53 share for each of Homestake`s 263.3 million shares outstanding, the company said in a release distributed by Canada NewsWire.


MfG Gulliver

[OnlineOli]

Sehr fein :-)))

[schloss]

Auch eine geschickte Methode die Vorwärtsverkaufe im Konzern relativ zu verringern.

[fischli]

unter Bezugnahme auch auf TFischer`s Kommentar in einem anderen thread kann man diese Verbindung auch als schaedlich fuer den Goldpreis sehen.
Grund: Barrick wird die Hedges bei Homestake erhoehen....

Als Zusammenfassung moeglicher Szenarien sei folgender Artikel von Tim Wood empfohlen (in englisch, sorry woolygol, aber die meisten Infos gibts eben in der Weltsprache).
gruss
fischli

Tim Wood
Posted: 06/25/2001 08:00:00 PM | © Miningweb 1997-2001
NEW YORK -- Investors trying to unpack the Barrick-Homestake merger
lasered in on hedging, seeking to understand what impact, if any, the deal
might have on the gold price. While there will be no immediate influence over
bullion prices, the deal underlines the schism in the industry between hedged
and unhedged producers.
-
In simple terms, any opposition to the deal will come from those who decry
Homestake joining with the most aggressive hedger. Those in favour will see
the 31% premium as too good to pass up and look forward to better rates of
return with hedging.

Activist shareholders and industry commentators have been working to
develop in investors` minds the idea of irreconcilable producer blocs. Hedged
producers, led by AngloGold and Barrick are vilified for behaving like
investment banks and depressing the gold price. Unhedged producers, typified
by Gold Fields and Newmont are praised for sticking to first principles that
help gold in the long run.

Homestake has benefited by packaging itself as a member of the unhedged
bloc allowing it to attract the industry`s highest premium rating. When the gold
price peaked in May the ratio of Homestake`s enterprise value to its earnings
was a whopping 230, eleven and half times more valuable than Barrick.

Any accusations of betrayal by Homestake ignore the fact that it doesn`t
publicly disavow hedging the way Franco-Nevada or Gold Fields do. A good
number of niche fund managers and retail investors may have overlooked that
in seeking out the greatest leverage to the gold price. The reality is that
Homestake hedges as it needs to; content to follow industry trends and
internal pragmatism rather than an immovable philosophy. Notably,
Homestake nearly doubled its hedge book in the first quarter of this year,
raising the relative proportion of hedged reserves in lockstep with its peers.

The net result of the merger, assuming it goes through unobstructed, will be a
mighty hedge book of 18 million ounces covering just shy of a quarter of total
reserves of 79.3 million ounces. Combined reserves surpass Gold Fields but
remain well short of AngloGold`s 106.5 million ounces.

The hedge is equal to a little over three years production which could be
interpreted favourably since it dilutes Barrick`s more aggressive four and a half
year cover. It should be noted that Barrick CEO Randall Oliphant says the
company is satisfied with the hedge book as it is given the diminished
contango. Mitsui`s Andy Smith sees that as probable confirmation that
Barrick has completed any required hedging ahead of the deal. "This is
equivalent to an `old style` central bank announcement; sales done, the market
can relax and watch price rally," he wrote in a client note.

But the reality is that Homestake`s reserves will now be managed according to
Barrick`s premium gold sales programme that will inevitably bring more ounces
to market.

Smith pinpoints the bear case no less efficiently. Homestake`s production
ounces come at a higher cost so have less chance of being insulated from
additional hedging. Matching Homestake`s cover to Barrick`s would require
hedging an additional 7.9 million ounces, nearly four times the current level.

There is little doubt that as a combined entity, Barrick-Homestake would
hedge more ounces than might be the case for the companies continuing
independently. That is invariably a large negative for gold price fundamentals.

With the deal likely to spur competitors to brush up on merger etiquette,
investors must be sensitive to the predominance of the hedgers. If the
AngloGold-Gold Fields merger, first mooted on Miningweb, does come off,
then it is conceivable that the volume of hedged ounces would increase even
further. On a matching basis, Gold Fields would hedge 9.5 million ounces.

There are no credible challengers to reverse the flow of the consolidation game
which is now dominated by the hedging faction. Even Franco-Nevada partner
Normandy has not slashed its hedge book as aggressively as might have
been expected. But then why should it when the depreciating Australian dollar
makes it so lucrative?

As the industry gears up for fewer participants struggling with diminishing
opportunities, it is the companies who can deliver the best total shareholder
returns that will last longest. There is no longer room for a church versus state
debate in gold mining.

[Sep]

Hier ein paar links zum Barrick Homestake deal:

http://www.mips1.net/MGGold.nsf/Current?OpenView


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