When Goldcorp Inc. executives sat down with their counterparts at Newmont Mining Corp. at an upscale restaurant in downtown Vancouver, it was supposed to be a casual get-together. The mid-December dinner had been on their schedules for some time, and was planned simply to build the rapport between the two senior gold mining companies.
Instead, in one of the restaurant’s private dining rooms, Newmont chair Noreen Doyle and chief executive Gary Goldberg told Goldcorp attendees it wanted to acquire the company. The reaction from Goldcorp chair Ian Telfer and CEO David Garofalo was shock.
While Vancouver’s Goldcorp had been exploring the idea of working with Denver-based Newmont for a few years, the idea of a takeover had never come up. However, with Goldcorp’s share price severely beaten down after many strategic blunders, it was vulnerable. In fact, Goldcorp had recently been talking with Australia’s Newcrest Mining Ltd. about a possible takeover of Goldcorp.
Over dinner, Newmont executives laid out the case for a US$10-billion acquisition of Goldcorp that would give the combined company 20 properties across four continents, the world’s highest gold production and many future development projects.
Code-named Altitude, the deal came together in only about a month. Some take years. For Mr. Telfer, the deal with Newmont was inevitable, especially with gold production among senior miners declining worldwide, gold reserves running low, and widespread investor apathy.
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