The cash offer was raised to $16 a share from $14.50 and the deadline for NovaGold shareholders to accept the bid was extended a fourth time to Nov. 7, Toronto-based Barrick said today in a statement. Barrick needs 50.1 percent of the shares to proceed with its takeover of Vancouver-based NovaGold.
Gold producers are making more takeover bids after bullion prices surged to a 26-year high and new reserves became harder to find. Barrick became the largest gold producer in March with its $10 billion acquisition of Placer Dome Inc. Shares of NovaGold rose 3.8 percent today to $15.64 in New York.
``Barrick's going to start to get some stock in this tender process based on the fact that the stock price is not trading above the tender offer now,'' said Sprott Securities analyst David Stein, who rates the stock a ``market perform'' and doesn't own shares. ``Whether it's enough to get 50 percent or not, that's a tough call.''
On the Toronto Stock Exchange, NovaGold rose 60 cents, or 3.5 percent, to C$17.63 at 12:17 p.m., giving the company a market value of C$1.88 billion ($1.67 billion) based on 106.7 million fully diluted shares outstanding.
NovaGold Response
NovaGold, which already had rejected the earlier offer, said in a separate statement that it is reviewing the revised bid and advised shareholders to take no action. NovaGold investors have so far tendered 167,679 shares to the offer, Barrick said.
``I suspect that the board will come out and reject the offer again,'' Stein said. ``My feeling is that there's a group of investors who will probably continue to side with management.''
Barrick probably would need to bid ``north of $20'' to win the support of all NovaGold shareholders,'' Stein said. Sprott Securities has participated in a NovaGold financing within the past two years.
``We are confident that we have arrived at a price which strikes a balance between NovaGold shareholder expectations of value and a price that is acceptable to Barrick,'' Barrick Chief Executive Officer Greg Wilkins said today in a statement.
Barrick shares rose 9 cents to C$34.33 in Toronto.
Barrick's offer is 6 percent above NovaGold's closing price of C$17.03 yesterday and about 36 percent higher than the stock price on July 21, the day before Barrick said it planned to acquire the gold company.
