Barrick Gold launches $18bn hostile offer to buy US rival

Barrick Gold has launched a hostile $18 billion all-stock offer for Newmont Mining, a combination that would create a gold mining titan and radically reshape an industry that has struggled to attract investors.

The Canadian-listed group said a merger of the two companies would offer greater benefits to shareholders than Newmont's planned $10 billion acquisition of Canadian miner Goldcorp.

Under the deal, Newmont shareholders would receive 2.5694 Barrick shares, giving them 44.1 per cent of the combined company.

The deal is conditional on Newmont scrapping its takeover of Goldcorp. It would create a miner with annual gold production of more than 10 million ounces and an equity market value of $40 billion.

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But the gambit by Barrick will raise questions about its ability to integrate another miner. Barrick has just completed the $6 billion acquisition of Randgold, which Barrick chief executive Mark Bristow built into London's biggest gold miner.

‘Negative premium’

Newmont said it would evaluate Barrick’s offer, which it claimed was a pitched at “negative premium” based on Friday’s closing prices.

“Newmont has previously determined that Barrick’s risk and return profile is inferior on many fronts, including factoring Barrick’s comparatively ineffective operating model, poor track record on delivering shareholder returns and unfavourable jurisdictional risk.”

Newmont, which is led by Gary Goldberg, is widely regarded as one of the best run companies in the gold industry. – Copyright The Financial Times Limited 2019