Canada-based Barrick Gold Corp (NYSE:GOLD) confirmed Monday morning its interest in buying Newmont Mining Corp (NYSE:NEM) in a deal expected to capture "the missing billions."
What Happened
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Media reports circulated last week that Barrick Gold is considering a hostile bid to acquire Newmont Mining for around $19 billion in stock. Barrick said in a press release Monday that a potential merger with the mining company would create the "world's best gold company with unprecedented potential for value creation."
As part of the proposal, Barrick would pay each Newmont shareholder 2.5694 Barrick shares for each Newmont share owned. This at-market transaction is based on the volume-weighted average trading prices of the shares of both companies over the 20 trading days prior to Feb. 20.
Barrick investors would own around 55.9 percent of the new entity, and Newmont's current annual dividend of 56 cents per share would be matched.
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Barrick said the proposed deal represents a "significantly superior" alternative to Newmont's prior proposal to Goldcorp Inc. (NYSE:GG), as it will be "materially more accretive on all key financial metrics" for Newmont investors, including net asset value per share and cash flow per share.
A deal would unlock more than $7 billion in net present value (pre-tax) of real synergies through the combination of complementary assets, plants and infrastructure, according to Barrick.
What's Next
Barrick said in an open letter to Newmont's board that it sees "no other transaction in our industry that can create better value for shareholders and other stakeholders." As such, the "time has come to execute" on the combination as quickly as possible to not only unlock billions of dollars in trapped value, but become the "premier gold investment in the marketplace," the company said.
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