Barrick Gold proposes merger with rival Newmont Mining

The Associated Press</span>
Published Monday, February 25, 2019 7:53AM EST
Last Updated Monday, February 25, 2019 11:29AM EST

TORONTO -- The chief executive of Barrick Gold Corp. delivered a stinging rebuke to Newmont Mining Corp.'s leadership on Monday, as he outlined his $18-billion vision for combining the two gold-mining giants.

Barrick CEO Mark Bristow said a combination of the two companies was "long overdue" and would be "far superior" to Newmont's proposed acquisition of Vancouver-based Goldcorp Inc.

In addition to arguing that Barrick's plan is financially superior, Bristow said Newmont's plan "strikes me as both desperate and bizarre."

Bristow claimed a Newmont-Goldcorp combination makes no sense because it "looks unlikely to deliver significant benefits to their shareholders" whereas a Barrick-Newmont deal would produce US$7 billion of "instant" synergies.

"This is the reason that we have, after some deliberation, decided to make an unsolicited but clearly superior proposal to the Newmont shareholders," Bristow said.

"We as a team can't wait until after Newmont and Goldcorp merge, because we don't want Goldcorp's lower quality assets in our portfolio."

Shares of the three companies were down slightly at mid-morning Monday. Barrick fell 21 cents or 1.2 per cent to $16.92, while Goldcorp stock dropped 1.4 per cent or 21 cents to $14.39 at the Toronto Stock Exchange.

On the New York Stock Exchange, Newmont was down two per cent or 70 cents at US$35.78.

The possibility of a deal with Newmont comes less than two months after Barrick completed its merger with Randgold Resources that saw Bristow, Randgold's founder, become chief executive of the combined company.

Bristow said Barrick had attempted repeatedly to strike a deal with Newmont in the past, but was unsuccessful for "reasons that escape me" because the advantages are "so obvious and compelling."

Newmont, based near Denver, said Monday it continues to see a Newmont-Goldcorp combination as the "best opportunity" for its shareholders, but that its board would "fully evaluate" the Barrick proposal.

However, it said Barrick's plan "ignores risks and overstates rewards."

"Newmont has previously determined that Barrick's risk and return profile is inferior on many fronts, including factoring Barrick's comparatively ineffective operating model, poor track record on delivering shareholder returns and unfavourable jurisdictional risk," the company said in a statement.

Under Barrick's zero-premium proposal, Newmont shareholders would receive 2.5694 Barrick shares for each Newmont share they hold. Barrick shareholders would end up owning 55.9 per cent of the combined company and the rest would be owned by shareholders of Newmont

Barrick said the combined company would match Newmont's annual dividend of 56 cents per share which, based on the proposed exchange ratio, will represent a pro forma annual dividend of 22 cents per Barrick share compared with Barrick's current annual dividend of 16 cents per share.

Based on the closing price at the Toronto Stock Exchange on Friday, the offer would be worth about C$44 per Newmont share or US$33.50. At that value, the offer for Newmont would be worth US$17.8 billion.

Let's block ads! (Why?)

Bagikan Berita Ini