After years of laying low, gold industry begins growing and deals are still waiting to be made. Barrick’s acquisition of Randgold Resources was just a month ago – and for well over $6 billion. Now they’re eyeing U.S. rival Newmont Mining Corp. Canada’s Barrick Gold Corp wants to offer nearly $18 billion in stock for the company.
However, this latest offer is starting to turn a little too hostile.
According to a statement offered by the Barrick Chief Executive Officer Mark Bristow, Newmont shareholders won’t get a better offer than this, and that together, the two companies will become a giant:
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. Most important, it will enable us to consider our Nevada assets as one complex.
Bristow argues that the combination of the two companies will help them lower costs by $7 billion.
Newmont CEO Gary Goldberg thinks this move is “desperate and bizarre attempt to muddle up our deal,” and that this behavior will not appeal to investors “who want to invest in serious, well-run companies.”
Barrick then wrote a public letter to the Newmont board to support his proposal.
Gold Prices to Rise
The deal will come with a rise in gold prices, notes Reuters Canada, adding that Newmont would be valued at $17.85 billion since Barrick’s proposal was “2.5694 common shares of Barrick for each Newmont share,” which meant one Newmont share is almost $33. The Newmont shareholders would have 44% of the shares of the combined company.
As a response to the offer, Newmont bid for Canada’s Goldcorp, offering $10 billion. Barrick stated on Monday that Newmont should drop their deal.
The shares from Newmont rose 1.4 percent to $37 early today.
Jeff Wilkinson is a Senior Politics Reporter at Debate Report covering provincial and national politics, . Before joining Debate Report, Jeff worked on several provincial campaigns including Jack Layton. Jeff has worked as a freelance journalist in Toronto, having been published by over 20 outlets including CBC, the Center for Media and VICE.com.