Barrick Gold, Newmont Mining CEOs argue over size as analysts question benefits of megamerger – by Gabriel Friedman (Financial Post – February 26, 2019)

Toronto-based Barrick Gold Corp. executives used to claim that unlike other companies in the precious metals industry, they would never make acquisitions to grow their footprint and size.

But on Monday after proposing a nearly $18-billion takeover of Colorado-based Newmont Mining Corp. — a deal that if consummated would create the world’s largest gold producer, with an estimated $42-billion market cap, by a distance — Barrick chief executive Mark Bristow acknowledged that being large is critical.

“The point is we really want to attract generalists back into the industry,” Bristow said on the conference call with investors. “We want to be relevant and we think that $40 billion is relevant.”

That’s receiving less attention as Bristow stresses the main rationales for the combination are an estimated $7 billion in cost savings, and putting many of the best mines in the world under his management.

Still, he did say that turning two roughly $20-billion companies into a single $40-billion company also forms part of the rationale for the combination. A larger company is more likely to appeal to investors who have fled the beaten down, high-risk gold sector — which after years of poor returns is primarily a domain inhabited by specialist investors.

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