Thursday 22 August 2019 3:40 pm

ISS and Glass Lewis back Barrick's bid for Acacia

Two major proxy advisers have lent their support to Barrick Gold as it waits for Acacia Mining’s shareholders to vote on its takeover bid.

Glass Lewis and ISS have in recent days both thrown their weight behind the bid, saying it represents the best value for Acacia’s long-suffering shareholders.

Read more: Tanzania allows Acacia to restart gold exports, but bigger problems remain

The gold miner has been struggling with an overbearing Tanzanian government, run by President John Magufuli, which has made it virtually impossible for the firm to run part of its operations in the country.

Barrick Gold, which is already its largest shareholder with nearly 34 per cent, has negotiated a way out of the crisis. But Magufuli has said the deal is off if Acacia is a co-signer.

“In essence, Acacia’s existence as a separately listed and managed enterprise is viewed as preclusive by the regulatory entities holding sway over the company’s economic viability,” said advisers at Glass Lewis.

Acacia does not really have any options other than to accept Barrick’s offer, which would hopefully let work resume, they added.

“We consider there are likely to be very few, if truly any, attractive alternatives to a share swap with Barrick.”

ISS said the share-only deal will offer “greater certainty for shareholders” and de-risk their investment by spreading it around.

The story began in March 2017 when Magufuli’s regime slapped an export ban on Acacia, stopping it from moving a gold-bearing ore out of the country.

Three months later, the government handed over a $190bn (£155bn) backdated tax bill, claiming that Acacia had under-reported the amount of gold in its exports for years. Soon after Barrick started negotiating directly with Tanzania, cutting out Acacia from the process.

In October 2017, Barrick signed a framework agreement with Magufuli’s regime. It would split economic benefits equally between the government and Acacia, and Acacia would agree to pay a $300m settlement.

Read more: Odey hedge fund backs Barrick Gold takeover of Acacia Mining

A year later Tanzania arrested three Acacia employees, holding them without trial or bail.

Shareholders are due to vote on the deal on 3 September.