Barrick Gold is going hostile in its bid to acquire Newmont Mining and create the world’s largest gold producer by offering $17.8 billion for the company in all share deal.
The offer raises the potential for a three-way fight between some of the world’s largest gold miners, and comes after Newmont’s chief executive blasted talks about a takeover as a “desperate” and “bizarre” move by Barrick.
Barrick said it’s offering “at market” valuation of 2.5694 a share for each Newmont share. That implies that it’s valuing Newmont at $17.8 billion and $33.50 a share, an 8% discount to Friday’s close.
The bid, if completed, would likely derail Newmont’s own $10 billion takeover of rival Goldcorp, announced last month, putting a big question mark over the future of three large gold miners. It would also put an end to years of on-again, off-again talks to merge Barrick and Newmont, the latest of which collapsed in 2014.
“It’s a desperate and bizarre attempt to muddle up our deal,” Newmont CEO Gary Goldberg said before Barrick’s announcement. “And it’s certainly not the sort of behavior that will appeal to investors who want to invest in serious, well-run companies.”
In an unusual step early in a takeover attempt, Barrick released a public letter to the board of Newmont with details of its proposal, urging them to support it.
A key part of Barrick’s quest for Newmont are its adjoining assets in Nevada. The two companies have talked about how some sort of “ unification” of their operations could benefit them.
Newmont advanced 1.4% in early trading as of 6:14 a.m. In New York. Barrick slipped 1.3%.
“There is no other transaction in our industry that can create better value for shareholders and other stakeholders than a business combination between Newmont and Barrick,” John Thornton, the executive chairman at Barrick, wrote to Newmont’s board. “The market reaction to date to your Goldcorp transaction suggests that investors do not endorse your rationale.”
Building the world’s largest gold miner was a goal of Barrick’s late founder Peter Munk, but in recent years the company has struggled to keep pace as it dealt with debt issues by selling assets and seeking joint ventures.
On Friday, Canadian mining giant Barrick informed the Newmont board that it bought 1,000 shares and warned the Greenwood Village, Colorado-based miner that it plans to propose changes to its bylaws, according to people familiar with the matter.