Barrick Gold Corp offered to buy U.S. rival Newmont Mining Corp for nearly $18 billion in stock on Monday, in a deal that would combine the world’s two largest gold producers.
Deal-making in the gold industry is growing after remaining dormant for many years. Barrick bought Randgold Resources in a $6 billion deal last month, setting off a wave of deals including Newmont’s $10 billion deal for Canada’s Goldcorp.
Barrick’s acquisition of Newmont will be contingent upon the company scrapping its agreement with Goldcorp, Barrick said, adding that its offer was a “significantly superior” option for Newmont shareholders.
“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,” Barrick Chief Executive Officer Mark Bristow said in a statement to Reuters. “Most important, it will enable us to consider our Nevada assets as one complex.”
One of Newmont’s chief areas of operations is Nevada, the largest U.S. gold- and silver-producing state, where Newmont’s 19 mines are adjacent to Barrick’s own operations.
The deal also comes amid a rise in gold prices, which have climbed some 11 per cent since October.
Under Barrick’s proposal, Newmont shareholders would receive 2.5694 common shares of Barrick for each Newmont share. That translates to a price of about $33 per Newmont share, valuing the company at $17.85 billion, according to Reuters calculations.
Newmont shareholders would hold about 44 per cent of the outstanding shares of the combined company.
Neither Newmont nor Goldcorp could immediately be reached for comment outside usual business hours.
Its shares rose 1.4 per cent to $37 in early trade on Monday.
Barrick also said the new company would match Newmont’s annual dividend of 56 cents per share which, based on the offer, will represent a pro-forma annual dividend of 22 cents per Barrick share.
(Reuters)
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