Barrick Gold Corporation (NYSE: GOLD) announced on Monday the proposal of a USD 17.85 Billion, all-share deal to merge with Newmont Mining Corporation (NYSE: NEM).
“The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with the largest portfolio of Tier One Gold assets and the highest level of free cash flow to drive future growth and support sustainable shareholder returns, run by a management team with an unparalleled record of delivering value,” said Barrick President and CEO Mark Bristow.
Newmont announced a USD 10 Billion all-stock deal back in January with rival Goldcorp Inc. (NYSE: GG) intended to create the world’s largest gold miner. Bristow is encouraging Newmont to ditch this deal in favor of merging with Barrick. Barrick said a merger with Newmont would produce annual synergies 7.5 times larger than the quoted annual synergies for Newmont’s deal with Goldcorp.
The deal proposes an exchange ratio of 2.5694 Barrick shares per Newmont share. Barrick stockholders would own approximately 55.9% of the merged company and Newmont shareholders would own approximately 44.1%. The combined company would match Newmont’s annual dividend of 56 cents per share.
In a letter to Newmont’s Board of Directors, Barrick said the completion of a merger between the two companies is contingent upon the termination of Newmont’s agreement with Goldcorp.
Barrick’s last high-profile merger came in September of last year when the Company agreed to buy Randgold Resources Ltd. Since the acquisition, the Barrick-Randgold combination has generated over USD 5 Billion of combined value for Barrick and former Randgold shareholders.