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Newmont Mining rejected rival Barrick Gold’s all-stock US$18 billion hostile takeover offer. Newmont CEO Gary Goldberg said Newmont’s board had concluded that its planned $10 billion takeover of Canada’s Goldcorp was the best deal for shareholders.
“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”, he said. He also indicated that value realization through Barrick’s proposal for Newmont’s shareholders will be hinged on an inexperienced management on global operating scale.
Barrick have recently embarked on a transformational integration journey and are still at its infancy. “Newmont’s latest proposal is essentially based on the stale and convoluted process that foundered previously,” Barrick new boss Mark Bristow said in a statement. Newmont have however indicated preference to a joint venture in their Nevada assets in USA. Barrick believes that JVs only work well when the majority owner is also the operator.
Barrick taking over Newmont will leave over US$7 Billion assets up for grabs ad would raise the prospect of Kalgoorlie’s Super Pit gold mine and the giant Boddington mine in the South West ending up in the hands of Australian owners. The offer rejection, anticipated by analysts, could consolidate the Colorado-based miner as the world’s biggest gold producer, with Barrick grabbing the second place and Australia’s Newcrest Mining (ASX: NCM) the third.
Barrick and Newmont have held merger talks every decade or so for almost thirty years, with the last one blowing at the 11th hour in 2014. A combination of the two would have created the world’s No.1 gold miner with annual production of more than 10 million ounces. Hostilities between the two companies have grown since Barrick’s approach last month.
On top of the chief executives trading insults, Newmont has now released private communications between Barrick ‘s Bristow and Goldcorp chairman Ian Telfer in which he praises the Vancouver-based miner’s “strong portfolio” of assets in “world class districts”. Bristow has previously said that Goldcorp had only one top tier gold asset in its portfolio, which is operated by Barrick.