Barrick considers Newmont merger
BARRICK Gold has confirmed it is reviewing an opportunity to merge with global rival Newmont Mining in an all-share nil premium transaction.
Following various media reports, on 22 February Barrick issued a two sentence statement verifying the news, but assured “no decision has been taken at this time”.
The mining giants jointly owned the Kalgoorlie Consolidated Gold Mines (KCGM) venture, which operates the Kalgoorlie Super Pit, in WA.
Takeover talks followed an active six months of M&A in the gold space, including Barrick’s $US6.5 billion acquisition of Randgold Resources in January.
In January, Newmont had also made a $US10 billion offer to purchase Goldcorp, which was scheduled to close in the June quarter.
Barrick was currently the world’s largest gold producer, and if the Newmont/Goldcorp merger went through as planned, it was set to lose this title.
On 24 February, Newmont said that Barrick – which currently owned a small percentage of Newmont stocks – planned to propose amendments to bylaws to lower the ownership threshold needed to call a meeting of Newmont shareholders from 25 per cent to 15 per cent.
The proposals would be made at Newmont’s next annual meeting of stockholders.
In a statement Newmont labelled Barrick’s bid as “unsolicited” and said it “does not intend to speculate about Barrick’s motivations or intentions and reserves all rights with respect to the shareholder proposals”.
Newmont had since issued a statement confirming it had received an acquisition proposal from Barrick, which was conditional on Newmont not proceeding with the proposed combination with Goldcorp.
“Newmont has previously reviewed and rejected potential combinations with each of Barrick and Randgold Resources, prior to their merger,” Newmont stated.
“Newmont’s proposed combination with Goldcorp represents the best opportunity to create optimal value for Newmont’s shareholders and other stakeholders.
“Newmont’s board of directors intends to fully evaluate the Barrick proposal and respond in due course, including providing advice to its shareholders.”
On 25 February, Barrick chief executive Mark Bristow encouraged the merger with Newmont, which he said would “form the world’s best gold company with unprecedented potential for value creation”.
“The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with the largest portfolio of tier one gold assets and the highest level of free cash flow to drive future growth and support sustainable shareholder returns, run by a management team with an unparalleled record of delivering value,” Mr Bristow said.