Newmont Mining Corp. officially rejected a US$17.8 billion hostile bid from Barrick Gold Corp. on Monday, and its chief executive Gary Goldberg went on the offensive.
In a call with investors and an interview with the Financial Post, Goldberg questioned why Barrick has not issued guidance beyond 2019, and suggested the company’s assets are in worse shape than has been publicly disclosed.
“Barrick has a problem and that’s why they need to push this,” he told the Financial Post. The bid by Barrick, which represents an eight per cent discount to the value of Newmont’s shares on the day it was proposed, has the potential to reshape the gold mining industry by creating an estimated US$42 billion company — which would be multiple times larger than its next nearest competitor.
Such a deal could also set a precedent for other companies in the sector to propose no-premium, or even negative premium, acquisitions of gold companies.
For Newmont, there is even more at stake. It is working to close a US$10 billion acquisition of Goldcorp Inc. by April, which could be derailed if Barrick can entice its shareholders to vote down the deal.