Canada's Barrick Gold must pay British negotiator Ian Hannam's firm $2 million plus costs for its work on the takeover of gold miner Randgold Resources, the High Court in London ruled Wednesday.
Hannam was previously one of JPMorgan's top revenue generators and was nicknamed the "mining king" for his track record in brokering deals in the resources sector, including the merger that created BHP Billiton in 2001 and the merger of Glencore and Xstrata in 2012.
His advisory boutique Hannam & Partners filed suit over a deal he said was reached shortly before Barrick's 2018 acquisition of Randgold. Hannam & Partners said he was promised a minimum of $10 million and that the figure would increase if the deal was worth more than $10 billion.
After Barrick and Randgold reached an agreement for a final value of about $18 billion, Hannam asked for $18 million and was refused. Randgold's lawyers said there was no written evidence of the alleged agreement and that Hannam & Partners was not owed any payment.
Judge Simon Gleeson stated in a written ruling that "no contract was ever entered into to provide investment advisory services." But he added: "The claimant's (Hannam & Partners) initial work in promoting the transaction conferred a valuable benefit on both Randgold and Barrick.
Both Randgold and Barrick acknowledged this and intended to pay the claimant the value they believed they had received. They estimated this amount to be $2 million. Gleeson said that Hannam & Partners was therefore entitled to $2 million plus its costs.
Neil Passmore, managing director of Hannam & Partners, said the decision was "a pivotal judgment for the investment banking industry with a substantial fee award for work done on a handshake, despite the fact that there was no written contract."
Barrick also called the ruling a victory, stating that Hannam & Partners had been awarded "the amount Randgold proposed to pay (Hannam & Partners) in September 2018 for its limited participation in the transaction."
Sam Tobin, Reuters