Gold miners in £14billion mega-merger
London to lose ANOTHER blue chip company
THE FTSE 100’s largest gold miner is being sold to a Canadian rival in a £14bn mega-merger.
London-listed Randgold Resources is joining forces with Barrick Gold to create the world’s largest gold mining business.
The move – which will see Randgold removed from the UK stock exchange – comes amid a slump in the price of gold that has driven down the value of both company’s shares.
The new business named Barrick will be worth around £14bn and manage some of the world’s most profitable gold operations in the US and Africa.
The deal unites two of the biggest players in gold mining – former Goldman Sachs banker John Thornton, who has run Barrick since 2014, and Mark Bristow who founded Randgold in 1995. But Barrick will be listed in New York and Toronto, knocking another business out of the FTSE 100 this year and reducing UK investors’ exposure to gold.
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Russ Mould, investment director at AJ Bell, said the takeover of Randgold by Barrick ‘looks like an odd move with a potential culture clash and a poor outcome for UK investors who don’t want to hold overseas-listed shares’.
He added: ‘UK shareholders are arguably being dealt a poor hand with the merger. The London market overall is also being punished as it will lose its largest gold miner.’
The deal, which values Randgold at close to £5bn, comes eight years after Barrick spun off its African assets into what is Acacia Mining, arguing that the London Stock Exchange better valued African assets. The tieup gives Randgold some exposure to Barrick’s assets outside Africa and Barrick some of Randgold’s knack for quickly building mines in challenging corners of the world. Yesterday Barrick also announced a deal with China’s Shandong Gold. Thornton, who will be executive chairman of the combined company, said: ‘Randgold has the proven ability to operate successfully in some of the most challenging environments in the world, while Barrick has been building relationships of depth and trust with China.’
Bristow will be chief executive of the new firm. However, with the companies’ stock having fallen about 30pc in the latest year and the sector under fire for bad spending decisions, some analysts argued that the deal was not made from a place of strength.
Kieron Hodgson, at Panmure Gordon, said: ‘The proposed merger is more akin to the proverbial two drunks supporting each other at closing time.’