Gold Takeovers Set Record


"Gold mining industry is in the Pac-Man phase."

gold takeovers set recordGlobal gold mining takeovers set a record this year with miners chasing deals as the price of the metal surged, boosting fees at BMO Capital Markets, HSBC and Merrill Lynch.

Kinross' purchase of Red Back Mining for ~$7.1 billion yesterday took the value of gold deals to $32bn this year, or 38% of all mining acquisitions. That's more than twice last year's total for the industry.

". . .we may have seen a pickup in activity this year because gold prices are around $1,200," said Merrill Lynch's Greg Fournier. "If you have a view that the gold price is strong and is going to go higher then acquiring more reserves or producing properties today makes sense."

Gold for immediate delivery rose $6.60, or 0.6%, to $1,189.45/oz. at 4:21 p.m. in London. Bullion advanced to a record $1,266.50 in June and is set for a 10th straight annual gain, the longest winning streak since at least 1920, attracting investment by fund managers including George Soros and John Paulson.

Takeovers may increase as China backs acquisitions abroad.

"China's domestic production of gold, albeit the largest in the world, cannot satisfy its demand," said Standard Bank Asia's Ellison Chu.

BMO Capital Markets remains the top gold adviser, with nine deals worth $20 billion, according to the data. That's followed by HSBC and Bank of America Corp.'s Merrill Lynch unit, which wasn't in the top 20 last year. BMO Capital, which was the senior adviser to Kinross for its Red Back purchase, is the top mining acquisitions adviser this year.

"There's always a battle of the elephants with gold companies, they like to be the biggest," said Stock Resource's Grant Craighead after Kinross agreed to buy Red Back yesterday. "It's a real chest-beating industry."

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