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China’s Zijin Gold and Canada’s Allied Gold have called off one of the biggest precious metals deals of the year, following FT reports that regulators in Beijing opposed the transaction.
The $4bn cash deal announced in January would have given Zijin control of key gold mines in Mali and Ethiopia, both countries where government intervention in the mining sector is on the rise.
However, objections from Chinese regulators, who are growing increasingly assertive in international dealmaking, have put the deal on the rocks in recent months, the FT has reported.
The National Development and Reform Commission recently asked the companies to get written assurance from the Malian government that it would not seize the Malian mine if Zijin completed the transaction, according to people familiar with their thinking. Such assurance was virtually impossible to obtain, the people added.
Shares in Toronto-listed Allied Gold have fallen steadily since late April when jihadist militants blockaded Mali’s capital.
The miner said the agreement had been mutually terminated as both companies “have concluded that there is no reasonable likelihood that the conditions relating to completion of the transaction” will be fulfilled by July 29, “or within any reasonable time thereafter”.
Allied’s chief executive Peter Marrone told the FT that he spent last week in Beijing in discussions related to the deal.
“The one very evident thing to us is that both companies genuinely support this transaction,” said Marrone. “But . . . the conclusion was that we have to find a different way.”
Despite the deal collapsing, Zijin will purchase a strategic 9.2 per cent stake in Allied for a cost of about $295mn.
As part of this investment, Marrone and vice-chair Justin Dibb have agreed to a lock-up period covering their combined holding of about 13 per cent of the company.
The acquisition would also have been the first big overseas deal for Zijin Gold, whose blockbuster Hong Kong public offering last year helped it to raise financing for international transactions.
Several other major resources deals are being held up as they await regulatory approval, including the combination of Anglo American and Teck Resources.
