Newmont Rejects Barrick Gold's Takeover Bid -- Update
March 04 2019 - 03:29PM
Dow Jones News
By Alistair MacDonald
Newmont Mining Corp. turned down a proposal from rival Barrick
Gold Corp. to merge and create one of the world's largest mining
companies, a widely expected move.
Newmont said in a news release that Barrick's all-share proposal
was inferior to the Denver-based mining company's own deal with
Goldcorp Inc.
The company, the U.S.'s second largest mining company as
measured by market capitalization, said it would be able to deliver
$365 million in annual cost savings or a total of $4.4 billion from
any combination with Goldcorp.
Early last week, Barrick offered $17.85 billion for Newmont in a
no-premium deal that would create a giant worth about $40 billion
at today's valuations.
Barrick has said that a combination with Newmont could strip out
costs of nearly $7.1 billion, most of which will come out of the
two companies' Nevada operations.
Newmont's Chief Executive Gary Goldberg has said that both
companies can reap costs savings in Nevada by forming a joint
venture, and that a full merger isn't needed. On Monday, the
company tabled a proposal to Barrick that details a joint venture
in Nevada.
"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," Mr. Goldberg said in a
statement.
Barrick CEO Mark Bristow said in a statement Monday that
Newmont's proposed joint venture is "unrealistic" because it calls
for the two companies to regularly swap leadership of the
partnership.
He said the Nevada operations "would be worth a whole lot more"
if it were run by one operator, and it should be Barrick at the
helm because its assets in the state are more valuable.
Last year Barrick merged with Randgold Resources in a $6 billion
all-stock deal. Randgold CEO became head of the new company.
Newmont said the merger brought investors political risk,
because so many of Rangold's mines are in Africa.
"By contrast, Newmont Goldcorp's assets will be located in
favorable mining jurisdictions and prolific gold districts on four
continents," the company said.
On Friday, Newmont's shares were trading at a premium to the
offer, based on Barrick's current share price. That means that as
things stand, Barrick would likely have to make a better offer to
win over Newmont shareholders.
Write to Alistair MacDonald at alistair.macdonald@wsj.com
(END) Dow Jones Newswires
March 04, 2019 15:14 ET (20:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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