Cadence Accepts Barrick's C$410m Takeover Bid

Cadence Energy Monday said it scuttled an agreement to be acquired by Daylight Resources Trust and accepted a C$410m cash offer from Barrick Gold Corp, a deal that the gold miner hopes will cut its energy costs.

Barrick, the world's biggest gold miner, said the Cadence board had accepted its C$6.75-a-share offer, made last week, saying the deal was "in the best interests of Cadence and its shareholders."

The bid topped Daylight's offer of C$0.47 of a share for each Cadence share, which valued Cadence shares at C$5.99. Daylight made its offer in late May.

Cadence said Daylight opted not to amend its bid for the oil producer and that terminated the offer. Cadence will pay a C$9m termination fee to Daylight.

Cadence had given Daylight, an oil and natural gas trust, until Monday to sweeten the offer.

"It's a fait accompli," said John Ing, President and a gold mining analyst at Maison Placements Canada. "Daylight Resources has walked, and rightly so. They could not match Barrick, so that's it."

Monday's agreement gives Barrick the right to match any superior offer for the energy company. Cadence agreed to pay Barrick a termination fee of C$11.4m if it accepts a higher offer.

Cadence shares slipped C$0.12 to C$6.67 on the Toronto Stock Exchange, just below the takeover price, reflecting investors' sentiment that no other bidders would emerge. Barrick was up C$0.50 at C$48.20.

Barrick is seeking to use Cadence's oil and gas production as a hedge against rising energy costs. The company said the deal was an attempt to lock in its oil exposure at lower rates than was currently available in the forward market.

For Barrick and other miners, high oil prices have mitigated the benefits of rising gold prices. Crude was sitting at around $129 a barrel on Monday and has averaged more than $123 during the second quarter.

Miners have found their margins dwindling as they struggle to keep costs such as energy, equipment and employment under control.

Barrick, which made its mark in the late 1980s with an innovative gold-hedging strategy, has tried a number of cost initiatives, including constructing a power plant in Nevada and signing a long-term agreement with Yokohama Rubberto supply oversized truck tires.

"In light of rising energy prices, this is a good deal. The rationale behind it was to provide some protection from the upside and this provides some price protection," Ing said.

By Scott Anderson, Reuters