Barrick Gold just traipsed into a potentially nasty battle short of ammunition.
On Monday morning, John Thornton, Barrick’s executive chairman, and CEO Mark Bristow unveiled a nil-premium, all-share offer for Colorado’s Newmont Mining. Hostile offers generally come with juicy premiums or else they don’t work, and this bid is already not working.
Were it to succeed, the audacious bid, which comes shortly after both companies announced transformative mergers of their own, would unite the two biggest names in gold mining, creating a colossus with gold operations on four continents, annual revenue of US$15.6-billion and trading liquidity that, to use Barrick’s politically incorrect term, would “dwarf” the competition.
Even before he learned the details of the “at market” offer, which valued Newmont at US$17.8-billion, Newmont chief executive Gary Goldberg dismissed the takeover attempt as a non-starter. He’s sticking with his plan to buy Vancouver’s Goldcorp for US$10-billion.
In a Bloomberg interview published shortly before Barrick revealed what it labelled an “unprecedented value creation opportunity for shareholders,” Mr. Goldberg called Barrick’s takeover idea “a desperate and bizarre attempt to muddle up our deal” with Goldcorp, all the more so since Newmont’s investor returns in recent years have embarrassed those of Barrick.