Barrick ends hostile bid for Newmont to form joint venture

Bloomberg

Barrick Gold Corp. is withdrawing its $17.8 billion hostile takeover bid for New- mont Mining Corp., with the companies opting instead to forge a joint venture around their Nevada projects.
The change came weeks after Barrick proposed an all-share offer that would have created the world’s largest gold producer. After Newmont’s board rejected the bid, Newmont Chief Executive Officer Gary Goldberg proposed the joint venture as an alternative both companies could gain from.
Barrick’s decision ends two weeks of animosity between the gold producers, and helps Newmont focus on securing shareholder approval for its previously announced offer to buy Goldcorp Inc. Newmont raised doubts about the Barrick bid from the start, saying its Goldcorp move offered better benefits.
“We listened to our shareholders and agreed with them that this was the best way to realize the enormous potential of the Nevada goldfields’ unequaled mineral endowment, and to maximize the returns from our operations there,” Barrick CEO Mark Bristow said in a statement on Monday.
Barrick gained 2.7 percent to $13.28 at 9:35 am in New York trading. Newmont is little changed at $33.59.
Barrick and Newmont said in 2014 that there was plenty of hidden gold still to be uncovered in Nevada, which accounted for a third of their output then, and produced more of the metal than South Africa and Chile combined.
Bristow had said that the bulk of the $7 billion synergies he envisioned from Barrick’s merger with Newmont would come from the two companies’ projects in Nevada. In response, Goldberg offered the joint venture, saying Barrick could take a 55 percent stake. When joint venture was finally annou-nced on Monday, the Toronto-based miner got a 61.5 percent stake, leaving Newmont with just 38.5 percent.
“We want these companies to really focus on realizing these synergies,” said Simon Jaeger, a portfolio manager at Flossbach von Storch AG, one of the top five shareholders of both companies. “We weren’t focused too much on the format. We were not in favor of the merger or a big transaction or a JV per se.”
There is no urgent need to sell assets covered by the joint venture, according to Goldberg. “That would be something we’d work through as part of the overall joint venture arrangement,” he said in a telephone interview.