Barrick adopts poison pill

The board of directors of Barrick Gold (ABX-T) has adopted a shareholder-rights plan designed to make the company more difficult to take over.

Barrick will propose the plan — which would remain in effect until 2002 if it is approved — at its annual meeting in May. The plan would allow shareholders to increase their shareholding at a discount to the market price if a person or company announced its intention to acquire 20% or more of the outstanding common shares, unless the bid either complied with the provisions of the plan or the board approved of it.

Under the proposed plan, the emergence of a bidder would trigger an offering allowing shareholders other than the bidder to purchase Barrick shares equivalent to their existing holdings at 50% of the market price. The plan describes a “permitted bid” as one open for at least 60 days and extendable for a further 10 days if at least 50% of the shares in other hands were tendered to the offer by the time the offer expired.

Barrick had earlier announced a normal-course issuer bid for up to 31 million shares, about 10% of its capitalization. If the Toronto Stock Exchange approves, Barrick’s bid would be in effect for a year and the company would buy its shares on the market at prevailing market prices.