Barrick Gold has officially announced its intention to make a $18bn bid for rival Newmont Mining. The all-share transaction would create the world’s largest gold company.
Barrick CEO Mark Bristow commented: “The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with the largest portfolio of Tier 1 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 growth.”
However, the announcement of what amounts to a hostile takeover bid from Barrick, was not warmly received by Newmont’s outgoing boss Gary Goldberg. Speaking at the BMO Capital Markets Global Metal & Mining Conference in Florida this week, he highlighted Barrick’s “unsolicited, negative premium proposal” and reinforced his board’s commitment to delivering superior value for shareholders:
“Our team has proven track record of successfully managing and operating a global mining portfolio, delivering total shareholder returns of 65% since January of 2014 compared with Randgold's anaemic 9% and Barrick's shocking negative 22% over that same period.
“The current Barrick management team has only been together for 8 weeks and has never collectively managed to the global portfolio of our scale, complexity or quality. We have delivered, they simply, have not. We have the global mining and management experience, they simply do not.”
Barrick’s intentions follow last month’s announcement from Newmont of its plans to combine with Goldcorp. Goldberg gave an update on this at the Florida conference:
“We announced our agreement to combine with Goldcorp in January, following extensive due diligence and our intention to create the world's leading gold business. Newmont-Goldcorp will operator a world-class portfolio of assets in 4 continents, leveraging our proven and scalable operating model.
“We'll target sustainable and profitable gold production of between six million and seven million ounces per year and expect to enhance annual revenues by another $1.5bn through silver, zinc and copper production. Combining forces will also gave us the gold sector's best project and exploration pipelines in terms of quality and depth.
“These prospects translate to the sector's largest reserve and resource base and an exceptional long-term leverage to the gold price. Equally important, we'll continue to have the financial flexibility we need to execute our capital priorities, deliver an industry-leading dividend and maintain an investment-grade balance sheet. We expect the transaction to close in the second quarter following our special stockholder meetings in April and receipt of all necessary regulatory approvals. And we're gratified to have received the Canadian Competition Bureau's clearance.”