The higher offer -- raised to $22.50 a share from $20.50 a share -- will be open until Jan. 19.
It will catapult Barrick ahead of Newmont Mining Corp (NEM). and AngloGold Ashanti Ltd. (AU) in world gold producer rankings with 2005 pro forma production of 8.3 million to 8.4 million ounces at cash costs of $245 to $250 an ounce.
"The agreement we are announcing today provides Placer Dome shareholders an attractive premium for their shares and an ongoing stake in a dynamic and growing company," Placer's chief executive, Peter Tomsett, said in a statement.
Placer stock eased just over 3 percent to $21.91 on the New York Stock Exchange, while Barrick shares were down just under 3 percent at $26.48.
The takeover includes a side deal under which Goldcorp Inc. (GG), another Canadian producer, will pay $1.485 billion for some Placer assets, up from $1.35 billion in the previous offer.
""We believe that the increased purchase price is justified as a result of recent increases in gold prices, the exploration success at Red Lake ... and additional synergies and tax efficiencies that we expect to arise from a friendly transaction," said Goldcorp Chief Executive Ian Telfer.
Placer, which had been looking for alternatives since Barrick unveiled the bid, said its board of directors recommends that its shareholders accept the offer.
Placer had rejected the initial $9.2 billion hostile bid, unveiled in October, as inadequate and opportunistic.
Under the terms of the latest agreement, Placer has the right to consider "superior" proposals from other parties -- something at least one analyst does not think is likely.
"It looks like the fight is all over," said Michael Fowler, an analyst at Desjardins Securities.
"I don't think someone else will come in and disrupt it."
Barrick has the right to match an alternative offer for Placer, and will under certain circumstances receive a $260 million break fee if the deal does not go through. It agreed to appoint three of Placer Dome's current directors to Barrick's board.
Goldcorp shares were up 62 Canadian cents at C$23.78 on the Toronto stock exchange.
($1- $1.17 Canadian)