The mining industry has been collectively holding its breath since Barrick Gold (TSE: ABX)(NYSE: GOLD) suggested they might be open to acquiring one of the largest U.S. mining companies, Newmont Mining (NYSE: NEM).
These suggestions come in light of an already approved $10 billion merger from Canadian gold giant Goldcorp and Newmont. While many were doubtful that Barrick would officially make an offer, the company announced they were doing just that, revealing a $17.8 billion hostile takeover attempt of their U.S.-based competitor on Monday morning.
The announcement, made before markets opened today, will only increase the potential for a three-way battle between the three mining giants. If successful, the bid would create the world’s largest gold company with an estimated value of being around $42 billion, as well as holding assets in almost every continent around the world.
“We believe the rationale is so compelling, and the benefits to both sets of shareholders so obvious, that it warrants the support of all investors. Synergies between the two companies represent a net asset value of more than $7 billion,” said Barrick chief executive Mark Bristow in a letter to shareholders. “More important, the merger will create a business with the world’s largest portfolio of Tier One gold assets, 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 sustainable value.”
Newmont responded by saying that the proposal largely ignored the risks while exaggerating the potential upsides by the merger. Former executives for both companies have expressed surprise at this announced merger. Newmont’s former president Pierre Lassonde would be one of these voices, saying that back in 2014 a proposed merger fell apart, and wondered why the Canadian gold giant would give the acquisition another shot.
Regardless of the sincerity of Barrick’s offer, the $18 billion takeover attempt has reinforced this development as the hottest topic within the mining sector currently as analysts look forward to the end result.
Barrick Gold Company Profile
Barrick Gold Corp is a gold mining company. The Company is principally engaged in the production and sale of gold and copper, as well as related activities, such as exploration and mine development. The Company’s segments, include Barrick Nevada, Golden Sunlight, Hemlo, Jabal Sayid, Kalgoorlie, Lagunas Norte, Lumwana, Porgera, Pueblo Viejo, Turquoise Ridge, Veladero and Zaldvar.
Pueblo Viejo, Lagunas Norte, Veladero and Turquoise Ridge are its individual gold mines. The Company, through its subsidiary Acacia, owns gold mines and exploration properties in Africa. Its Porgera and Kalgoorlie are gold mines. Zaldivar and Lumwana are copper mines. The Pascua-Lama project is located on the border between Chile and Argentina. The Company owns a number of producing gold mines, which are located in Canada, the United States, Peru, Argentina, Australia and the Dominican Republic. – Reuters
Newmont Mining Company Profile
Newmont is a leading gold and copper producer. The Company’s operations are primarily in the United States, Australia, Ghana, Peru and Suriname. Newmont is the only gold producer listed in the S&P 500 Index and was named the mining industry leader by the Dow Jones Sustainability World Index in 2015, 2016, 2017 and 2018. The Company is an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925. – Newmont