Tags: newmont | barrack | gold | takeover

Newmont Cites Barrick Co-Chairman Thornton for Breakdown of Merger Talks

Monday, 28 Apr 2014 11:00 AM

Newmont Mining Corp. criticized Barrick Gold Corp. Co-Chairman John Thornton for not being constructive as it ended merger talks, the latest of several failed attempts over more than two decades to combine the world’s two largest gold producers.

“While our team has found your management team’s engagement to be constructive and professional, the same constructive nature cannot be said of our discussions with your co-chairman on certain fundamental strategic and structural issues over the past two weeks,” Newmont Chairman Vincent Calarco said in an April 25 letter sent to Barrick’s board that was published Monday.

“Our efforts to find consensus have been rejected out of hand repeatedly.”

Canada’s Barrick and Greenwood Village, Colorado-based Newmont identified annual savings of $1 billion in their talks this month, two people with knowledge of the matter said April 19. Barrick was to offer Newmont shareholders a takeover premium of 13 percent, the people said. The talks were halted April 18 amid disagreements related to a proposed spinoff of some of the combined company’s mines, the people said.

Calarco cited press reports that quoted Barrick Chairman Peter Munk describing Newmont as “not shareholder-friendly.” Munk, who founded Barrick in 1983, will retire as chairman at the company’s annual shareholder meeting on April 30, when he will be replaced by Thornton.

“None of this suggests that we have the mutual respect or shared values today that we believe are necessary for the enterprise that would result from the combination of our companies to realize its full potential,” Calarco said in the letter.

Planned Spinoff

The interests of Barrick’s shareholders are best served in a merger, the Toronto-based company said in a statement.

Newmont dropped 5.6 percent to $24.99 at 10:10 a.m. in New York. Barrick fell 1.3 percent to C$19.49 in Toronto.

Munk said last week that the latest round of talks may be different from previous attempts to merge because of the increased pressure to cut costs following gold’s decline. Shareholders may also put pressure on the companies to seal a deal, he said. Gold plunged 28 percent last year, the most in three decades, leading to at least $30 billion of writedowns across the gold-mining industry.

Most of the efficiencies seen in a Barrick-Newmont deal would come from the combination of their operations in Nevada, where they produce more than a third of their gold.

Speaking in an April 23 interview at Bloomberg headquarters in New York, Munk said the plan to spin off some of the combined company’s assets outside North America would help reduce risk, improve profitability and make the combination more attractive.

‘Cultural Differences’

Newmont and Barrick have “cultural differences” that made it difficult to reach a deal and Newmont is “not shareholder friendly,” Munk said last week in an interview with the National Post newspaper.

Newmont produced 1.77 million ounces of gold in Nevada last year, the company said in a Jan. 31 presentation, 35 percent of the total company gold output of 5.07 million ounces. Barrick’s Nevada production was about 2.79 million ounces, based on company disclosures, 39 percent of last year’s total.

Barrick and Newmont already are equal partners in the Kalgoorlie mine in Australia, and jointly own the Turquoise Ridge mine in Nevada, with Barrick controlling 75 percent.


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Newmont Mining Corp. criticized Barrick Gold Corp. Co-Chairman John Thornton for not being constructive as it ended merger talks, the latest of several failed attempts over more than two decades to combine the world's two largest gold producers.
newmont, barrack, gold, takeover
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2014-00-28
Monday, 28 Apr 2014 11:00 AM
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