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PROFILE : International Business : Master Deal Maker Scores Another Coup With Canadian Buy : Acquisitions: Peter Munk's purchase of Lac Minerals could create the largest gold mining firm in the world.

August 25, 1994|From Reuters

TORONTO — Fifty years ago, Peter Munk and his family were safely spirited out of German-occupied Budapest after his grandfather cut a deal with the Nazis.

The past few months prove that the young Munk learned the lessons of his banker grandfather well.

The urbane Hungarian, now 66, is one of the slickest deal makers in North America.

He is the man behind the dual stellar fortunes of Horsham Corp., named after the English hometown of his wife, Melanie, and American Barrick Resources Corp.

"We had plenty of good luck. But you name me somebody who can build $8 billion worth of value in 10 years who says he's had no luck and I'll show you a liar," Munk said in a recent interview.

Barrick's stock has shot up nearly 600% since 1985.

Now, after snapping North America's biggest public real estate company up out of court protection in a headline-grabbing deal, Munk has apparently won one of the biggest Canadian gold miners.

On Wednesday, Lac Minerals said its board agreed to American Barrick's sweetened $1.62-billion takeover bid. Combined, the two Canadian gold miners are expected to rival South African companies as the largest in the world.

Lac, which had been fighting to stay independent, agreed to the sweetened offer from Barrick even though it was less than a rival bid by upstart Royal Oak Mines Ltd.

Royal Oak launched the takeover battle in July with a bold attempt to gobble up Lac, a company four times its size. American Barrick initially offered $1.5 billion. Royal Oak was offering $1.7 billion.

American Barrick's higher-quality assets, more liquid shares and strong cash position apparently proved more attractive to Lac shareholders, many of whom are institutional investors, than did aspects of the Royal Oak bid.

Just last month, Munk's Horsham and Argo Partnership closed the acquisition of 68.5% of troubled real estate player Trizec Corp., which had been struggling to restructure $1.45 billion of debt, for $797 million.

The deal left Munk "exhilarated," he said, but he quickly moved on to his next target, locking horns with Royal Oak and its controversial chief executive, Margaret Witte, for control of Lac.

Barrick was touted back in 1989 as a possible suitor for Lac, with its rich treasury and under-performing stock.

"We were interested (in 1989), but Goldstrike became so overly important . . . We didn't want to do two things at once," Munk said.

Barrick's most important deal was the purchase of the Goldstrike property in Nevada from Pancana Minerals and Western States for $62 million--a price many analysts jeered at as far too high at the time.

Goldstrike soon became a bonanza and the mainstay of Barrick's spectacular growth. But Lac would be a welcome addition to the Barrick stable since Goldstrike is maturing.

Munk has often been called a man with a Midas touch--he has been on a roll for decades despite a couple of dramatic failures early in his career.

He came to Canada in 1948 at the invitation of his uncle, earned an electrical engineering degree from the University of Toronto and has spent most of his business life here.

But many of his involvements have been international and occasionally somewhat dubious.

In 1969, Munk and college friend David Gilmour set up an international hotel company, South Pacific Properties Ltd., whose properties eventually comprised the biggest string of hotels in the Pacific, from Fiji and Tahiti to Australia and New Zealand.

In 1974, SPP set up a joint venture with the Egyptian government to build a giant resort next to the pyramids. One of those backstopping the project was arms dealer Adnan Khashoggi.

Egyptian President Anwar Sadat slammed the doors shut on the deal in 1978. Munk's next venture, American Barrick, was a much sounder bet.

With all its mines, including the spectacular Goldstrike, Barrick now sits on the largest gold reserves in North America.

Meanwhile, Horsham, the holding and investment umbrella of Munk's empire, has shaken up St. Louis-based Clark Refining & Marketing Corp. and bought real estate near Berlin, Germany.

Barrick grew through acquisition and sharp management from a foundering oil and natural gas company into one of the biggest gold producers in North America.

Lac would give Barrick a strong foothold in Latin America, and Munk said he is looking to Asia for a third major geographic area.

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