Barrick Gold launches unsolicited bid to acquire Newmont in all-stock mining deal

New York (Feb 25)  Barrick Gold on Monday announced an unsolicited plan to merge with Newmont Mining in an all-share transaction, prompting Newmont to criticize Barrick's performance and potentially setting up a hostile bid.

 

Shares of Barrick and Newmont fell 1 percent Monday morning.

Newmont said it would consider Barrick's overture, but claimed its plan announced last month to buy Goldcorp for $10 billion represents the "best opportunity to create optimal value" for shareholders. It notes that Barrick is proposing to purchase Newmont's shares at a discount to last week's closing price.

Newmont said it has already reviewed and rejected potential tie-ups with Barrick and Randgold Resources. Barrick completed its purchase of Randgold last month.

Barrick CEO Mark Bristow said the merger would unlock more than $7 billion net present value of real synergies, a major portion of which is generated by combining the two companies' assets in Nevada.

"The combination of Barrick and Newmont will create what is clearly the world's best gold company, with the largest portfolio of Tier One 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 value," he said in a statement.

"Most important, it will enable us to consider our Nevada assets as one complex, which will result in better mine planning and fully realize the state's enormous geological potential for all stakeholders."

Newmont countered that the Nevada synergies could be achieved by entering a joint venture with Barrick. That path would allow Newmont to reap the benefits without "exposing Newmont's shareholders to Barrick's riskier portfolio, integration risks and transaction costs," the company said.

Barrick's announcement said the deal would be "long overdue," and "far superior to Newmont's proposed acquisition of Goldcorp Inc."

The merger would offer each Newmont shareholder 2.5694 Barrick shares. Barrick shareholders would own approximately 55.9 percent of the merged company and Newmont shareholders would own the rest. The combined company intends to match Newmont's annual dividend of 56 cents per share.

CNBC

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