The geologist and the banker blaze a trail
Randgold Resources and Barrick Gold are hoping to capitalise on each other’s strengths in their blockbuster merger.
mark Bristow, the founding CEO of Randgold Resources, insists alignment on business principles will be the unifying force that smooths over the obvious differences between himself and John Thornton, executive chairman of Barrick Gold. The $13bn Canadian gold-mining company unveiled a blockbuster merger with Randgold on 24 September.
Described by the Financial Times as “the odd couple”, Bristow and Thornton strike different personal notes. Thornton, a former Goldman Sachs Group chairman, and with a disaffection for commercial flights, moves between appointments in Barrick’s Gulfstream V jet, according to the Wall Street Journal.
In an obvious effort to seed the market before the merger, Thornton conducted an interview with the paper, 10 days prior to the transaction announcement at the Denver Gold
Forum. It took place in the super exclusive Pasley-Tyler club on Berkeley Square in London’s Mayfair, one of the capital’s plusher districts.
At the time of finweek’s interview with Bristow – an executive who claims not to have an office – he was making his way back to his New York hotel room where he’d left his other mobile phone. You could hear him muttering to hotel staff: “Room number…?” Pause. “I’ll have to phone you back,” he said.
The two have completely different styles. Bristow is rough and ready, off-hand and rarely checks himself in interviews. Thornton is media shy. To Thornton’s old-tie banking pedigree, Bristow, a geologist, is on-site and tends to no tie. Randgold is largely no frills whereas Barrick has long since left behind the entrepreneurial esprit of its late founder, the HungarianCanadian Peter Munk – an ethic to which Thornton is hoping to return the company, hence the proposed merger with Randgold which he has described as a “back to the future” moment for Barrick.
The selling point of the proposed merger – which Bristow said was briefly run past largely supportive shareholders during the weekend prior to its announcement – is that Randgold will bring its know-how of already operating a highly tuned cash flow-generating business. In return, Barrick contributes three of five overall “tier one” assets the merged company will contain.
Barrick also brings a relationship with Chinese companies Zijin and Shandong, investors interested in providing capital that Thornton insists will help de-risk the combined entity, especially given its African exposure. Randgold’s mines are exclusively in Africa (all of which Bristow and Team scoped out and developed in-house). Barrick contributes its 64% Acacia Mining, a business listed in London.
“One of the things I modelled Randgold on when we started was the early Barrick,” says Bristow. “That Barrick was fast-running, had an owneroperator structure and focused on profitability.”
Following a series of discussions with Thornton, that intensified from the beginning of this year as the notion of a merger took shape, Bristow learned of the American’s “shock” at how poorly run Barrick had become.
As a result, Thornton’s trail-blazing reforms at Barrick, and a reticence to preserve sacred cows, mirrors Bristow’s own approach. The two had previously been introduced through a mutual friend. “He called me up and said there was a guy I should meet,” says Bristow.
Bristow landed up in New York. “Everyone was sweating at the time,” he says, referring to the then gold price of just
The merger with Randgold is an attempt to forge a new type of investment case, combining the scale of the two entities with a focus on free cash flow.