Newmont CEO comments seen as unlikely to re-spark Barrick merger talks, source says
Newmont Mining (NYSE:NEM) CEO Gary Goldberg’s comments on Thursday that he was still open to merger talks with Barrick Gold (TSX:ABX) are unlikely to get Barrick back to the negotiating table at this time, a source familiar with the matter said.
Barrick's thought process had not changed since talks between the gold miners fell apart in April, the source said, adding that the company has “moved on.” This was also in line with Barrick Executive Chairman John Thornton’s comments in July that rekindling merger talks was not something on the Toronto, Ontario-based supermajor's mind.
At the time, Barrick said that a key reason behind the talks breaking down was Newmont’s reneging on three key elements of the term sheet signed by both companies on 8 April. The crucial points were identification of the assets that would be included in a spin-off company; "carefully constructed governance agreements," describing the role and authority of the chairman, lead director and CEO of the combined companies; and the location of a joint head office in Toronto.
The source brushed off speculation that Thornton could offer Goldberg a co-president role in the event a merger between the companies materialized. Barrick announced in July that COO Jim Gowans and African Barrick Chairman Kelvin Dushnisky would be named co-presidents and current CEO Jamie Sokalsy would be stepping down on 15 September.
An industry banker noted that after the talks collapsed in April, it appeared unlikely that they would restart anytime soon. In this pricing environment, a bigger precious metals company is almost always worse than a smaller one, this banker pointed out.
An industry executive agreed with these comments, saying it was unclear whether the management teams of Barrick and Newmont could constructively work together and referenced the "messy" way the most recent round of merger talks had ended between the two companies.
Leading up to the late-April announcement, Barrick and Newmont traded volleys of press releases and public statements that included negative characterizations of Barrick’s co-chairman by Newmont and reported assertions by Barrick founder Peter Munk that Newmont was extremely bureaucratic and "not shareholder-friendly."
A second banker, however, noted one can never say never in terms of a merger being scuppered.
Prior to the talks falling apart, a separate source familiar with the situation said that Barrick had retained RBC Capital Markets and Michael Klein & Co as financial advisors for the transaction, along with Davies and Cravath, Swain & Moore as legal advisors.
A Newmont spokesperson said Goldberg's comments were consistent with what the company has stated previously. Barrick declined comment.