SHARES in African Barrick Gold (ABG) jumped by eight per cent in trading yesterday on news that it could be the subject of a £1.5bn bid battle.
A source close to the company said several bidders were circling the London-listed gold producer, which is 74 per cent-owned by its parent Barrick Gold, but only a bid from China Gold was being taken seriously.
Canada’s Barrick Gold, which is the world’s largest gold producer, confirmed yesterday that it was in preliminary discussions with China Gold regarding a sale of its stake in ABG, as part of its global asset review.
It is thought that another China gold producer, Zijin, was also looking at ABG, but the bid was considered too low for consideration. Randgold Resources has also been rumoured to be circling around Barrick Gold’s African arm.
FTSE 250 company ABG was floated on the London Stock Exchange in 2010 by the Canadian producer at 575p a share.
It is understood that Barrick would consider a deal at around 500p a share, which values it at £1.5bn.
If China Gold acquires more than 30 per cent of ABG, it will be required to make a formal offer for the whole company.
Cailey Barker, mining analyst at Numis Securities, said there was “a good chance of a sell-down”.
Barrick is being advised by Simon Lyons, Sam Roberts and Paul Knight from investment bank UBS on the deal. Lyons and Roberts have previously advised on the BA and Iberia merger and Vodafone’s acquisition of CWW respectively.