Barrick-Newmont merger collapses into toxic war of words – by Peter Koven (National Post – April 29, 2014)

The National Post is Canada’s second largest national paper.

TORONTO — A much-anticipated merger between Barrick Gold Corp. and Newmont Mining Corp. has collapsed into a toxic public feud between leaders of the two firms that simply could not get along.

Talks between the two companies are finished, and sources said there is no chance they will start again anytime soon. That is bad news for shareholders, who stood to benefit if the miners combined their highly complementary Nevada operations.

It would have been the biggest deal in the history of the gold mining sector. Its failure demonstrates that clashing personalities can destroy a transaction that seemingly makes sense in every other way.

The two firms have tried to merge numerous times over the years, but personality clashes got in the way each time. This time was no different, though this was as close as they ever got to a deal. Newmont initiated the latest round of negotiations.

“They’re like two kids in the sandbox,” said John Ing, president and gold analyst at Maison Placements Canada. “The logic of the merger is there, but when you get down to board seats and personalities, it’s a different kettle of fish.”

It is understood that Barrick co-chairman John Thornton, who led the negotiations on Barrick’s side, is livid at Newmont for allegedly reneging on key aspects of a signed agreement. Newmont denied those allegations. It released a letter from chairman Vincent Calarco saying that efforts to reach a consensus with Mr. Thornton were “rejected out of hand repeatedly.”

Both companies acknowledged they signed a term sheet on April 8 for a proposed merger in which Barrick would acquire Newmont for about US$13-billion. The preliminary document laid out the key details of the transaction, including a 13% premium for Newmont shareholders and which executives would hold which jobs.

According to Barrick, Newmont then reneged on three important points: The head office location (Barrick insisted it be in Toronto), which assets to put into a spin-off company and governance roles.

The third sticking point was the trickiest. Under the terms of the agreement, Mr. Thornton was going to be executive chairman of the “New Barrick,” Mr. Calarco would be lead director and current Newmont chief executive Gary Goldberg would be CEO. Barrick insiders believe that Denver-based Newmont wanted to water down Mr. Thornton’s role, giving the Newmont insiders too much authority over the combined company.

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