OPINION: Expect gold mining takeovers, but no takeover premiums – by Andrew Willis (Globe and Mail – June 1, 2020)


The gold mining sector is being rocked by a round of mergers and acquisitions that’s widely expected to pick up steam. Courtesy of one influential executive, Barrick Gold Corp.’s Mark Bristow, what’s missing from the current round of deal-making is the premium prices that defined past takeovers.

Precious metals stocks are market darlings because the price of gold is soaring on fears of a pandemic-induced economic downturn and currency-debasing inflation.

The last time bullion prices tested these historic highs, a decade ago, a number of mining chief executive officers binged on wealth-destroying deals.

Companies such as Barrick and Kinross Gold Corp. acquired rivals at premium prices – 20 per cent to 30 per cent above where the target company’s stock was trading – then spent years dealing with a hangover of paying down debt and writing down the value of assets.

Enter Mr. Bristow. Two years ago, he was CEO of Randgold Resources Ltd. when Barrick made an all-stock, US$6-billion offer for his company that featured no premium to where Randgold shares were trading, and proposed that Mr. Bristow would join Barrick as its CEO.

For the rest of this column: https://www.theglobeandmail.com/business/commentary/article-expect-gold-mining-takeovers-but-no-takeover-premiums/

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