Acquisitive Barrick Gold flexes muscles again with $18bn hostile bid for Newmont
Two global gold miners could merge this year to form what would undisputedly be the world’s largest producer of the precious metal, amid increased consolidation in the sector.
Giant Barrick Gold has launched a hostile bid to buy rival Newmont for a share-only deal valued at around $18bn (£14bn).
Read more: Shareholders at Randgold Resources back merger with Barrick Gold
The deal promises to save around $7bn in pre-tax synergies according to Barrick, and would create an industry behemoth.
It comes just months after Barrick completed another mega-merger, buying Randgold off the London Stock exchange for $6.1bn.
In a fairly small market, gold miners have been looking to consolidate.
Julian Treger, chief executive of London-listed Anglo Pacific told City A.M: “Barrick’s intention to merge with its rival Newmont, so soon after its merger with Randgold Resources, suggests that Barrick sees value coming through merger and acquisition activity rather than organic growth, despite recently strong gold prices.”
Just last month Newmont announced it would itself become the world’s largest gold miner with a $10bn bid for its smaller rival Goldcorp.
The takeover, which is still pending, would have become the biggest ever in the sector according to data from Refinitiv.
However, Barrick’s chief executive Mark Bristow said his proposal offers a much better deal for Newmont shareholders.
He said the synergies were around 7.5 times larger than the Goldcorp deal and offer shareholders a company of “a much higher quality”.
“The combination of Barrick and Newmont will create what is clearly the world’s best gold company,” Bristow said.
He added: “Considered globally, the merger represents a radical and long-overdue restructuring of the gold industry, and a transformative shift from short-term survival tactics to the long-term creation of sustainable value.”
Read more: Newmont forms world's largest gold miner with $10bn deal
Gary Goldberg, the chief executive of Newmont, told the Financial Times he is willing to sit down with Bristow to discuss combining their Nevada gold mines, but admitted to being “perplexed” by the offer.
“You don’t need to go through all this hoopla they’re going through currently to extract that value,” he said.