Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
Even when a merger is no longer on the horizon, the two sides still disagree. Such is the case as Toronto’s Barrick Gold issued a terse press release this morning to say that talks of a merger with Newmont Mining of Denver have been terminated at Newmont’s request.
That might have been the end of it, but Newmont released the text of an April 25, 2014, letter from chairman Vincent A. Calarco to Barrick co-chair John L. Thornton. Newmont said it had been hopeful that the two companies could merge and realize their combined strengths. However, over recent weeks the talks had become adversarial rather than oriented toward a mutually beneficial partnership.
“Our board,” wrote Calarco, “has met a number of times since we were twice told definitively last Thursday by your co-chairman that the process in which we had been engaged to find a basis to merge our two companies was ‘dead’. As you would expect, that unilateral declaration made us question whether we actually shared the vision and values that are necessary to forge a successful new company.”
Unsaid, but understood, is that Newmont is pointing the finger at Thornton.
“While our team has found your management team’s engagement to be constructive and professional, the same constructive nature cannot be said of our discussions with your co-chairman on certain fundamental strategic and structural issues over the past two weeks. Our efforts to find consensus have been rejected out of hand repeatedly,” reads the letter.
Calarco also took a sideswipe at the press, saying, “And, as we contemplated further dialogue, we read in the continuing reporting of the transaction in the financial press a pointed characterization of our company as ‘extremely bureaucratic and not shareholder friendly.’ Nothing could be further from the truth. Moreover, none of this suggests that we have the mutual respect or shared values today that we believe are necessary for the enterprise that would result from the combination of our companies to realize its full potential.”
Barrick fired back, saying that failure of the talks was Newmont’s fault because that company reneged on three foundational elements of the signed term sheet: locating the head office in Toronto; assets to be spun off; and the governance arrangements.
Late Monday afternoon, Newmont issued a release saying it did not renege on the agreement and “strongly disagrees with Barrick’s characterization of events that followed.”
So there will be no friendly merger of Barrick and Newmont in the near future. That does not close the door on a hostile offer from Barrick, or a friendly offer for Newmont from some other mining company.