Barrick Gold Corporation looks to be absorbed in its own organic growth programme at the moment however they have pulled off some pretty big take-overs in the past so we ask could this be the year that they hit the acquisition trail with a vengeance?
According to Google Finance Barrick Gold Corporation has a market capitalisation of 28.97 billion dollars, a P/E ratio of 16.41 and an average volume of 13.78 million shares traded. As of 30th September 2008 they had cash and equivalents of 1.746 billion dollars. This cash plus their ability to raise capital if required puts Barrick in a strong position for the acquisition of other precious metals producers.
Now if we throw into the mix a new a player in form of Aaron Regent who has just been appointed President and Chief Executive Officer of the Company, the stage is set for change. The new man will want to make his mark and do it quickly.
Their strategy could one of picking off a myriad of small gold producers with ounces in the ground and an interesting story to tell. The list of possible candidates that fit this profile is fairly long and we could waste oceans of time trying to second-guess what will appeal to Barrick. On the other hand they could make a real splash and go for an acquisition that would have a dramatic impact by adding to Barrick’s gold reserves, a quality pipeline of projects and a good management team to see those projects come to fruition. Any predator would prefer a friendly take-over however not all target companies will be willing to be swallowed up by a bigger fish, so a hostile take-over may be necessary.
Why do we care? Well, if we happen to be holding the stock of the target company then we should make a handsome profit on the trade assuming that a healthy premium to the stock price is to be paid.
You probably have many names jumping into the picture and so have we, however we will mention a few that we believe could be on the short list.
Goldcorp Inc at $23 billion is probably a little ambitious.
Newmont Mining at $17 billion is also a giant.
Kinross Gold Corporation at $12 billion, a quality stock that would be a real scoop.
AngloGold Ashanti limited at $7 billion.
Agnico-Eagle Mines at $7 billion, another quality scoop.
Yamana gold at $5 billion, a little smaller but may be easier to acquire.
At $4 billion and below we have Llhir Gold Limited and Harmony Gold and further down the list we have Iamgold at $2 billion.
This is just our imagination of course but we wont be surprised to see one of these companies disappear in 2009.
If you believe that there are more suitable take-over candidates then please feel free to fire them in!
Have a good one.
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