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Gold/Mining/Energy : ARP - V Argentina Gold
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To: robert azana who wrote (1972)1/17/1999 11:58:00 PM
From: dumbo  Read Replies (1) of 3282
 
I agree with you that Barrick would like to get this property and is likely to pay more, however, they may not be able to sit back and wait for a competing bid which they would top. Put yourself in Newmont's position. Would you bid against Barrick when Barrick has the most expensive equity paper in the market? Barrick would just top them. So, if I was Newmont and I wanted the property and management of ARP was inviting me to bid, I'd do it only under the condition of a hard lock up. I'd demand that the Lundin group and that TD Asset Management lock up at a fixed price which would guarantee me at least 30% of the stock and a recommendation by the board to accept Newmont's bid. I'd agree to, for the sake of a number,say $6 per share. Lundins and TD would lock in and if Barrick topped the bid, they would get say 1/2 the difference by which a competing bid exceeded $7 per share. Now, Barrick would be stuck. They would have to pay over $7 or Newmont would control the play. If Barrick topped $7, Newmont could either pay up again or sell their own and locked up shares for a nice profit. This is the risk that Barrick takes by waiting. This is why we will not see a bidding war but only a done deal. Of course, Barrick could let Newmont get ARP and then just take over Newmont!
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