Randgold and Barrick agree $18bn gold mining merger
All-share tie-up at nil premium would create the world’s leading gold miner
Canada’s Barrick Gold is to merge with Randgold Resources, its UK-listed rival, in a $18bn deal that will create the world’s leading gold miner.
The new company, which will be led by Randgold chief executive Mark Bristow, will produce more than 6.5m ounces of gold a year, eclipsing its nearest competitor Newmont Mining.
Under the deal – a recommended nil premium merger – Barrick is offering 6.128 of its shares for each Randgold share.
Barrick’s shareholders will own 64 per cent of the merged entity, with the rest controlled by investors Randgold. Shares in Barrick closed at C$13.52 on Friday.
The deal values each Randgold share at around the closing price on Friday of £49.
John Thornton, executive chairman of Barrick, who keep the same role at the merged company, said the combination would bring together the world’s largest collection of “Tier One” gold assets.
“Our overriding measure of success will be the returns we generate and not the number of ounces we produce, balancing boldness and prudence to deliver consistent and growing returns to our fellow owners, a truly simple but radical and achievable concept, he said.
“There are no premiums in the merger because we strongly believe in the opportunity to add significant value for our shareholders from the disciplined management of our combined asset base and a focus on truly profitable growth.”
The merger between Barrick and Randgold follows a dismal year for the sector, which has struggled to attract the interest of investors.
Shares in Barrick have dropped 25 per cent amid criticism of its strategy, while Randgold has fallen 34 per cent as it has struggled with a number of operational issues, including a strike at one of its biggest mines.
That is a worse performance than the gold price, which is down by 9 per cent year-to-date to $1,206 a troy ounce, hit by a stronger US dollar.