Anglogold comes to the aid of Acacia

Titan Anglogold (AU-N) intends to take over Australia’s Acacia Resource by 3.5 shares in exchange for 100 shares of Acacia, valued at a 24% premium on the Australian Stock Exchange.

Meanwhile, rival bidder Delta Gold has offered Acacia’s shareholders an 11% premium, with a 1-for-1 share exchange. Acacia immediately rejected Delta’s proposal, and has since embraced Anglogold, in absence of a higher bid.

The offer will not be subject to a minimum acceptance of Acacia shareholders but will be conditional on approval of the South African Reserve Bank and the Australian Foreign Investment Review Board. The acquisition, valued at US$546 million, gives Anglogold a foothold in Australia, and further diversifies its holdings in Africa, the U.S. and South America.

Acacia has interests in four mines with a combined production of more than 500,000 oz. per year. These include the wholly owned Sunrise Dam and 33%-held Boddington mines in Western Australia, and the wholly owned Pine Creek and 40%-held Tanami mines in the Northern Territory. Acacia has reserves of 3.8 million oz., while resources are pegged at 11.4 million oz.

If Anglogold acquires these interests, the proportion of its open-pit production would rise 23%. The acquisition would have little effect on Anglogold’s earnings per share, though it should improve cash flow and net asset value per share.

The takeover would also boost Anglogold’s production to 7.5 million oz. gold in 2000, while cash operating costs would fall slightly below US$210 per oz.