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A spat between Barrick Gold Corp. and Newmont Mining Corp. erupted into a public war of words, with the companies accusing each other of ruining their $13-billion (U.S.) merger.
Barrick said its American rival reneged on their deal and tried to change key provisions, including the location of the head office in Toronto. Newmont disagreed with Barrick’s version and faulted the Canadian company’s incoming chairman John Thornton for not being constructive.
Over the years, the world’s two largest gold producers have made several attempts to unite and cut expenses in Nevada, where they both own multiple mines. The slump in the gold industry fuelled their latest merger ambitions, with the companies identifying about $1-billion in cost savings.
But they ultimately could not overcome two decades of personality clashes and cultural differences, which exploded into the public domain on Monday and likely killed any future merger discussions.
“It has become evident to us over the past several weeks that the type of constructive, mutually respectful and partnership-oriented relationship necessary to realize the potential benefits of that combination does not yet exist,” Newmont’s chairman Vincent Calarco said in an April 25 letter to Barrick’s board and Mr. Thornton, posted on Newmont’s website Monday. “Our efforts to find consensus have been rejected out of hand repeatedly.”
The Colorado-based company cast most of the blame on Mr. Thornton, a former Goldman Sachs executive who is currently Barrick’s co-chairman. It was also angered when Barrick’s founder Peter Munk, who is due to retire as the miner’s chairman on Wednesday, told the Financial Post that Newmont was extremely bureaucratic and unfriendly to shareholders.
“None of this suggests that we have the mutual respect or shared values today,” the Newmont letter said.
Barrick said that the companies had signed a term sheet April 8, only to see Newmont back out of the three key elements of the deal: a Toronto-headquartered company, the composition of the combined company and the roles of the chairman, chief executive officer and lead director.
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