‘Barrick has a problem’: Newmont spurns rival’s $17.8B hostile bid
Newmont Mining Corp. officially rejected a US$17.8 billion hostile bid from Barrick Gold Corp. on Monday as its chief executive Gary Goldberg went on the offensive.
In a call with investors and an interview, Goldberg questioned why Barrick has not issued guidance beyond 2019, and suggested the company’s assets are in worse shape than has been publicly disclosed. “Barrick has a problem and that’s why they need to push this,” he told the Financial Post. The bid by Barrick has the potential to reshape the gold mining industry by creating an estimated US$42-billion company — which would be multiple times larger than its next nearest competitor. For Newmont, more is at stake. It is working to close a US$10-billion acquisition of Goldcorp Inc. by April.
Newmont and Barrick, the two largest gold companies in the world, discussed a tie-up in 2014 but those talks fell apart. Both have assets in Nevada, which many analysts believe would make sense to combine. Now, Barrick’s chief executive Mark Bristow, who joined the company in January after his former firm, Randgold Resources Inc., was acquired in a US$6-billion transaction, has revived the idea of combining both companies citing an estimated $4.7 billion in synergies in Nevada alone, and $7.1 billion in total over the next two decades. Bristow has said he is proposing a megamerger so quickly into his tenure because Newmont would become unattractive if it acquires Goldcorp’s assets, but Goldberg pushed back against the claim. In a conference call on Monday, Newmont released correspondence from May 2017, in which Bristow wrote an email to Goldcorp chairman Ian Telfer saying that his company had “a strong portfolio of assets in world-class districts” and suggested some sort of tie-up with his then-company Randgold.