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Barrick Gold’s chair said he “never” planned to appoint veteran commodities dealmaker Ian Hannam to advise on its tie-up with Randgold, after the banker sued claiming he engineered the $6bn deal but was not paid.
John Thornton told the High Court in London that while he had been happy to have Hannam’s views on the merger, as there was “very little downside” to doing so, it had always been his intention to use Wall Street rainmaker Michael Klein on the 2018 deal.
Thornton, one of the mining industry’s most influential figures, appeared in the witness box on Monday in a case that is shedding unusual insights into how top investment bankers pitch to executives — and scrap over fees — on multibillion-dollar deals.
Hannam & Partners, Hannam’s boutique, is demanding up to $18mn from Canada’s Barrick Gold, whose combination with London-listed Randgold created what was at the time the world’s biggest gold miner.
Hannam claims to have been cut out of the deal, which would “not have happened without me”, at the last minute. He told the court he had been “shocked” to see Klein’s firm named in the release that announced the merger but no mention of H&P.
Thornton said in his witness statement that he sensed Hannam was “relatively close” to Randgold founder Mark Bristow and was “therefore in favour of keeping a line of communication open with Mr Hannam to the extent that he could provide insight into what was going on at Randgold”.
However, he added: “I knew that I was never going to appoint Mr Hannam, because I favoured and had access to Michael Klein, with whom I had been close for many years.”
Klein “was always going to be Barrick’s adviser in connection with the Randgold merger so long as I was involved”, he added.
Thornton, a former Goldman Sachs banker, told the court that he had “quietly started looking for a merger partner” after his appointment as executive chair of Barrick in 2014. He raised the idea of a nil-premium merger with Bristow the same year.
Thornton said he viewed Hannam, a former special forces soldier who earned a reputation as the “king of mining M&A”, “favourably” as a “very distinct and colourful character”.
But he dismissed several of his claims. While it was the case that Hannam devised the code name British Rail for the deal, he said this was “of no substantive importance”.
“I did not need Ian Hannam’s help to do a merger,” Thornton added. Lawyers for Barrick have said there was “no written evidence” of an agreement with H&P for the payment of fees.
Hannam told the court that he had been in “regular dialogue” with Thornton about the merger. In 2018, Thornton told him that Klein would be Barrick’s financial adviser but that he and Bristow had agreed that Randgold would engage Hannam’s firm, an arrangement he had accepted.
Klein has been closely involved in several of the mining sector’s biggest deals, including the $90bn Glencore Xstrata merger in 2012. He also advised Glencore on its hostile bid for Canada’s Teck Resources last year. Teck rejected the takeover attempt, but sold a $6.9bn majority stake in its steelmaking coal business to Glencore.
Following the merger of Barrick and Randgold, Klein advised Barrick on an $18bn attempt to acquire gold miner Newmont, though that was ultimately unsuccessful.
The case continues.
Additional reporting by Leslie Hook
