Barrick Gold Corp. agreed to buy Randgold Resources Ltd. in a deal valuing the combined company at US$18 billion, creating a gold mining behemoth with a focus on Africa.
The all-share transaction values Randgold at US$5.4 billion, making it the biggest gold mining deal of the past three years. The deal will help Barrick boost output at a time when its stock has been punished for a stagnant pipeline. The company’s shares have about halved from a February 2017 peak.
“Randgold has a proven ability to operate successfully in some of the most challenging environments in the world,” Barrick Executive Chairman John Thornton said on a conference call. “The combined company will have five of the world’s top 10 tier-one gold assets.”
Under the deal, Barrick shareholders will own about two-thirds of the new entity and Randgold investors the remainder, the companies said on Monday. Thornton last month outlined Barrick’s plan to add more top-quality mines and to gradually shed anything of a lower caliber or that’s not deemed to be “strategic.” The combined company would have the lowest cash cost position among its peers, Barrick said.
Barrick’s gold production fell to 5.3 million ounces in 2017, from more than 8 million ounces a decade earlier, according to data compiled by Bloomberg. The company shed non-core assets outright, or sold stakes to partners, to repair its balance sheet, after its debt peaked at $15.8 billion in 2013.
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