David Garofalo seemed to have everything going for him. A polished executive with a strong résumé in mining, he was hired to run Goldcorp Inc. in 2015, giving him control of what looked like a darling in a moribund sector.
Unlike many of its peers, Goldcorp came out of the commodity crash with a favourable view from investors. It had avoided mega-acquisitions. The balance sheet looked good.
Three years later, Mr. Garofalo has lost the confidence of shareholders. Goldcorp’s stock fell by more than half, hit by falling production and rising costs, prompting U.S. gold giant Newmont Mining Corp. to step forward this week with a deal to buy the company for US$10-billion. It’s not certain if Mr. Garofalo will have a job at the merged company. What is clear is that another big Canadian-based mining company is falling into foreign hands.
Cue the nationalist hand-wringing. This deal comes weeks after Barrick Gold Corp.’s Toronto head office was gutted by layoffs, thanks to its merger with South Africa’s Randgold Resources Ltd. At Barrick, Randgold’s former management team is now running the show – from the Channel Islands.
So the optics of this second takeover aren’t good, and Newmont knows it. In its announcement, the miner spelled out the deal’s benefits to Canada – a feature reminiscent of the measures BHP Billiton and China’s CNOOC took when they tried to sell their proposed acquisitions of Canadian resource companies a few years back. Newmont is trying to smooth over Canadian anxieties about watching Barrick and Goldcorp fall under foreign control.