Newmont Mining Rejects Hostile Takeover Bid From Canada’s Barrick Gold

The board of US mining company Newmont on Monday unanimously rejected a hostile takeover bid from Canadian rival Barrick Gold, saying its own merger with Goldcorp was a better option.

Toronto-based Barrick announced the takeover offer last week, proposing a share swap that would have combined the world’s biggest gold miners to create a juggernaut worth an estimated $42 billion.

Barrick’s “all-stock negative premium proposal” would not be in the best interests of shareholders, Newmont said in a statement, and instead offered a joint venture in their adjacent operations in Nevada in the western United States.

Newmont said its own previously-announced $10 billion combination with Canada’s Goldcorp “represents a superior value creation opportunity to generate long-term value.” Newmont Chief Executive Gary Goldberg said, “Unlike Barrick, Newmont Goldcorp will be centered in the world’s most favorable mining jurisdictions and gold districts.”

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Barrick and Newmont had flirted with the idea of merging five years ago but talks fell apart over who would lead the combined firm and where to locate its headquarters — Toronto or Denver.The industry has been consolidating as gold mines around the world get depleted, driving up costs and encouraging companies to come together in mergers and alliances. In last week’s offer, Barrick said it was offering 2.5694 of its shares for each one of Newmont’s, which would have given the Canadian firm 55.9 percent of the newly created entity. But Goldberg said this was not the best offer and that it had hinged “entirely on a new management team that lacks global operating experience.”

“Our thorough review of Barrick’s unsolicited proposal and its associated risks has reaffirmed our conclusion that the combination of Newmont and Goldcorp represents the best opportunity to create value for Newmont’s shareholders and deliver industry-leading returns for decades to come,” he said in the statement.

Newmont said the takeover offer entailed half the added value of the Goldcorp merger and that Barrick’s “portfolio includes numerous unfavorable and high-risk jurisdictions with several ongoing and significant operational and sustainability problems.”

But the company submitted a joint venture offer that would take advantage of the adjoining gold mines in Nevada, and “would enable both companies’ shareholders to realize the available synergies while avoiding the significant risks and complexities associated with Barrick’s unsolicited proposal,” Goldberg said. Newmont’s tie-up with Vancouver-based Goldcorp would allow the firm to leapfrog Barrick as top gold miner, and would increase share value by around 30 percent.