Barrick needs a deal maker, not a deal breaker – by Boyd Erman (Globe and Mail – April 29, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Barrick Gold Corp. co-chairman John Thornton has laid out a vision for creating a diversified miner – a vision that is going to be more difficult to realize after a nasty end to talks in his first major transaction.

Mr. Thornton has stated he wants Barrick to be a leader “in a range of minerals.” To do that, he is going to have to be a buyer, adding companies that produce other metals to complement Barrick’s output of gold and copper. So it’s all the more problematic that would-be merger partner Newmont Mining Corp. singled out Mr. Thornton as a particular obstacle to getting a deal done. Even if it’s not true (and it’s hard to know what is fact in any such situation), the statement is out there now and will be attached to Mr. Thornton’s name.

Negotiations break down all the time, between all types of companies. But rarely do supposedly secret talks spill into the public sphere quite so comprehensively as they have in the past week, as seemingly every detail of the talks between Barrick and Newmont landed in the press. Since the first reports that merger talks between the two had hit a snag, the premium, the timing, the consideration, the executive structure and other key terms all made their way to the press even though neither side ever publicly confirmed the negotiations.

That changed Monday, when Barrick said there had been talks but they ended because Newmont pulled out. After that, the companies traded accusatory press releases like Frazier and Ali traded punches. Nobody comes out unhurt in such a flurry, but Barrick has more to lose.

Newmont has never been a terribly busy company when it comes to mergers and acquisitions, unlike Barrick, which has grown by takeovers, for good or ill. And Mr. Thornton, with his investment banking background at Goldman Sachs Group Inc., had been viewed as a deal maker who could transform Barrick after taking over from founder Peter Munk as sole executive chairman at the company’s annual meeting this week.

Imagine how Mr. Thornton’s calls to potential merger partners will now be received.

Newmont went so far as to release the letter it sent to the Barrick board Friday, in which it said that while Barrick’s management was “constructive and professional, the same constructive nature cannot be said of discussions with your co-chairman.”

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