Barrick Gold has been ordered to pay veteran dealmaker Ian Hannam’s firm $2mn plus legal costs after the High Court in London found his advisory boutique helped engineer a $6bn merger and failed to be compensated.
Hannam & Partners had demanded up to $18mn from the Canadian mining group, claiming it was central to a transformational combination in 2018 between Barrick and London-listed Randgold but that it was “pushed out” of the deal at the last minute.
The legal battle over fees from the deal to create what was at the time the world’s biggest gold miner namechecked Wall Street rainmaker Michael Klein and involved several other big names in the investment banking and mining industries.
They included Barrick’s Mark Bristow and John Thornton as well as Hannam, who earned a reputation as the “king of mining M&A” for his role in high-profile deals.
In a lengthy judgment on Wednesday, Judge Simon Gleeson found H & P had secured no legally binding agreement for fees on the deal. Even so, he ruled in its favour on a legal principle known as unjust enrichment.
Speaking after the ruling, Hannam said: “My word is my bond is still at the heart of a client relationship.” He said the judge had “underlined the tenets of this relationship, which have existed in the City of London for centuries”.
Hannam said his firm “never took on this litigation just for its fees. There were important matters of principle at stake.”
The case shone a light on behind-the-scenes, and sometimes fractious, deliberations between corporate executives and advisers who work on high-stakes M&A deals.
Gleeson said the case raised “a number of difficult legal questions where — as here — an adviser believes it has been appointed whilst its client believes it has not”.
“Investment bankers, like teenage lovers, pour out their efforts, almost without limit and in response to the slightest encouragement in the hope of reaching the nirvana of a mandate,” the judge wrote.
Hannam, a former special forces soldier, had told the court during the proceedings that the deal, for which he had coined the code name British Rail, “would not have happened without me”.
He said he had been “shocked” to see a press release that announced the deal in which there was no mention of H&P while Klein’s firm, M Klein & Co, was cited.
Barrick Gold had “categorically denied” the claims. Bristow, who was Randgold’s chief executive before the deal and now runs the merged entity, told the court that Hannam had not been formally involved in the transaction, and described an invoice for $18mn that H & P sent in September 2018 as “outrageous”.
Gleeson ruled that “no contract of the form pleaded [by H & P] was ever entered into”. However, he said there was a “common basis of understanding that H & P would be appointed”.
The judge cited specific instances of work conducted by H & P, including a “storyboard” presentation that set out a rationale for a Barrick acquisition of Randgold. Gleeson also noted Hannam acted as a “go-between” between Bristow and Barrick’s Thornton, a former Goldman Sachs president who now chairs the enlarged group.
“The claimant’s early work in promoting the transaction conferred a valuable benefit on both Randgold and Barrick,” Gleeson said.
He concluded: “I therefore find that the claimant is entitled to recover $2mn plus their expenses (to be agreed) from the defendant.”
Barrick did not immediately respond to a request to comment.
