Newmont Rejects Barrick Gold's Takeover Bid

By Alistair MacDonald 

Newmont Mining Corp. turned down a proposal from rival Barrick Gold Corp. to merge, in a widely expected move that now leaves investors with the decision over whether these two companies should combine to create one of the world's largest mining companies.

Newmont said in a news release that Barrick's all-share proposal was inferior to the Denver-based mining company's own deal with Goldcorp Inc.

The company, the U.S.'s second largest mining company as measured by market capitalization, said it would be able to deliver $365 million in annual cost savings or $4.4 billion from any combination with Goldcorp.

Early last week, Barrick offered $17.85 billion for Newmont in a no-premium deal that would create a giant worth about $40 billion at today's valuations.

Barrick has said that a combination with Newmont could strip out costs of nearly $7.1 billion, most of which will come out of the two companies' Nevada operations.

Barrick wasn't immediately available for comment.

Newmont's Chief Executive Gary Goldberg has said that both companies can reap costs savings in Nevada by forming a joint venture, and that a full merger isn't needed. On Monday, the company tabled a proposal to Barrick that details a joint venture in Nevada.

"Realizing value through Barrick's proposal for Newmont's shareholders hinges entirely on a new management team that lacks global operating experience and is only two months into its own transformational integration," Mr. Goldberg said in a statement.

Last year Barrick merged with Randgold Resources in a $6 billion all-stock deal. Randgold CEO became head of the new company.

Newmont also said that merger brought investors political risk, because so many of Rangold's mines are in Africa.

"By contrast, Newmont Goldcorp's assets will be located in favorable mining jurisdictions and prolific gold districts on four continents," the company said.

On Friday, Newmont's shares were trading at a premium to the offer, based on Barrick's current share price. That means that as things stand, Barrick would likely have to make a better offer to win over Newmont shareholders.

Write to Alistair MacDonald at [e-mail]

(END) Dow Jones Newswires

March 04, 2019 09:04 ET (14:04 GMT)

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