Barrick Gold’s lunge for Newmont Mining has officially gone hostile, extremely so, with Newmont formally rejecting the Canadian company’s US$17.8-billion offer and blasting its executive chairman, John Thornton, for shabby performance. But this is not the end of the story – don’t count Barrick out just yet.
On Monday, as expected, Newmont, America’s biggest gold company, told Barrick to hit the road. Its all-share, nil-premium offer, revealed on Feb. 25, was a non-starter, Newmont said in its presentation, arguing that Newmont’s proposed US$10-billion takeover of Vancouver’s Goldcorp was less risky and would create ample value for shareholders.
Newmont and its CEO, Gary Goldberg, lashed out at both Mr. Thornton and Barrick CEO Mark Bristow, though it was Mr. Thornton, the former Goldman Sachs boss who replaced the late Peter Munk as Barrick chairman in 2014, who took the most criticism.
Newmont gleefully noted that since Mr. Thornton’s arrival, Barrick’s share price has underperformed Newmont’s by US$12-billion. Since the end of 2013, Barrick’s total shareholder return (including reinvested dividends) was negative 22 per cent. Newmont’s total return was 65 per cent.
“John Thornton is still firmly in control of Barrick,” the defence presentation blared, implying that Mr. Thornton might deliver the kiss of death to shareholder returns if his dream of buying Newmont succeeds.