The mining industry has been enjoying a fair deal of media attention as a three-way merger battle proceeds between the world’s largest gold mining companies. Last week, Barrick Gold (TSX: ABX)(NYSE: GOLD), the world’s largest gold miner, made an $18 billion all-stock hostile takeover bid to purchase U.S.-based Newmont Mining (NYSE: NEM).
While rumors were flying whether or not such an offer would officially be made, the announcement surprised many in the industry. However, today Newmont Mining rejected the $18 billion offer from their Canadian rival, preferring to stick with it’s existing planned $10 billion takeover of Goldcorp (TSX: G)(NYSE: GG).
“The combination with Goldcorp is significantly more accretive to Newmont’s shareholders on all relevant metrics compared to Barrick’s proposal, even when factoring in Barrick’s own synergy estimates,” said Newmont CEO Gary Goldberg in an official announcement rejecting the offer. “Realizing value through Barrick’s proposal for Newmont’s shareholders hinges entirely on a new management team that lacks global operating experience and is only two months into its own transformational integration.”
Currently, Newmont’s agreement to takeover Goldcorp for $10 billion has been approved by Canadian regulators. However, under those terms, the US-based miner isn’t allowed to engage with Barrick after the board official rejects their offer.
Barrick’s CEO Mark Bristow had his own thoughts to saw, criticizing Newmont’s decision to stick with its proposed acquisition of Goldcorp. “Newmont’s latest proposal is essentially based on the stale and convoluted process that foundered previously. As usual, it comes with unrealistic preconditions including swapping the chairmanship and the leadership of the JV. Experience has shown us that JVs only work well when the majority owner is also the operator,” he said according to The Financial Times.
Overall, the anticipated merger between Newmont and Goldcorp would create the world’s largest gold producer, ousting Barrick in second place with Australia’s Newcrest Mining (ASX: NCM) coming in third. This comes as a considerable blow for Barrick, as the Canadian company has been in talks with Newmont about potential mergers consistently every ten years or so, with the last talk in 2014 falling apart towards the end of a possible agreement. Barrick, perhaps mistakenly, chose not to offer Newmont shareholders a premium, arguing that the synergies between the two giants alone would be worth it.
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