Canada’s Barrick Gold is set to attract Randgold Resources shareholders with sweetened dividend terms to appease investors unhappy with its nil-premium takeover offer for the Africa-focused mining company.
Barrick announced in September that it had agreed to buy Randgold to create the world’s largest gold company, but some analysts were unsatisfied with the lack of a premium in the $6.1 billion deal. To appease the critics, Barrick said Randgold investors have been promised a 35 percent increase on their share dividends. They will receive $2.69 cents per share in 2018, up from an initial $2 per share.
A statement released by Barrick said “based on Randgold’s dividend policy and its financial performance in 2018 to date, Randgold has determined that a dividend of $2.69 per share for 2018 would be consistent with that dividend policy”. It was revealed that the dividend will be declared and paid prior to the merger closing.
Investec analyst Hunter Hillcoat said “I assume it followed pushback from Randgold investors, who had been looking for sweeter dividends in light of (Randgold CEO) Mark Bristow’s pledge to return all cash above $500 million, barring new project development”.
Randgold, which generated cash through operating its African gold mines cheaply while rivals struggled with big debts, has steadily increased its payout to shareholders over the years.
John Thornton, Barrick’s executive chairman, noted that Randgold has the “agility and swift-footedness of a younger and smaller company, much like Barrick in its early years”.
The takeover is expected to close in the first quarter of 2019 and it represents the sector’s biggest transaction in years.