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Newmont-Barrick battle puts the 'hostile' into hostile takeover

5th March 2019

By: Bloomberg

  

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TORONTO – Hostile takeovers are never pretty, but the battle between Barrick Gold and Newmont Mining has all the appearance of an outright brawl.

In the past week, leaders at the two companies have disparaged their counterparts as inept managers who have squandered assets and destroyed shareholder value. And that’s before a formal offer is even on the table.

At stake is a potential $17.8-billion deal that would create the world’s largest gold producer. Newmont kicked off the fighting talk, with CEO Gary Goldberg calling Barrick’s proposal to buy the company “desperate and bizarre” even before Barrick publicly presented its terms on February 25. Barrick CEO Mark Bristow responded in kind, saying he could run Newmont’s assets better than Goldberg does.

The bid by Toronto-based Barrick includes no premium. Newmont’s board rejected the offer on Monday, saying its shareholders would be better off completing a pending purchase of Goldcorp Inc. But Goldberg also offered a concession, saying his company would be willing to negotiate a friendly joint venture with Barrick at their Nevada operations that would give Barrick the greater share -- in addition to pushing forward with the Goldcorp deal.

Barrick has said it is keen to talk as well. But how such negotiations could ever be friendly is hard to imagine, given the company’s history and comments made over the past week.

WAR OF WORDS

The war of words started immediately after Barrick confirmed it was contemplating a bid. Goldberg quickly questioned whether Barrick’s management team is capable of running a combined Newmont-Barrick company, saying, “they haven’t delivered.’’

Later Goldberg got a bit more personal, targeting Bristow by name. “Mark has never run a global portfolio,’’ Goldberg said. “In fact, I’d say none of his team have run a global portfolio like what we have in place.’’

In a March 4 presentation, Goldberg seemed to damn Bristow with faint praise. Sure, “there is no doubt that Mark has been successful as an explorer and a geologist,’’ Goldberg said. But “as an operator, he has not created shareholder value and he has yet to prove that he can successfully manage or integrate a global portfolio.’’

Goldberg also didn’t spare Barrick chairman John Thornton, a former Goldman Sachs Group Inc. president who joined the gold industry in 2012. In the presentation, Goldberg accused Thornton of “numerous missteps’’ and “value destruction.’’

UNDERPERFORMED

Newmont’s slide presentation said that since Thornton arrived at the company, it has underperformed Newmont by more than $12-billion, “while pocketing over $65-million from Barrick shareholders.”

For his part, Bristow has been less personal, though no less direct, saying he could do a better job managing gold fields in Nevada, where Barrick has long wanted to combine its fields with Newmont’s. Bristow also suggested that because Goldberg is scheduled to leave as CEO at the end of the year, Newmont is in an unstable situation. And he’s said Newmont’s play for Goldcorp would destroy shareholder value.

Newmont’s suggestion that Barrick could take the larger stake in a JV seemed to calm the waters today -- but suspicions on both sides remain high. Bristow says Newmont’s JV pitch may be just a “smoke screen” to block its hostile bid. Meanwhile, Newmont has said all along that Barrick’s hostile bid is really about derailing its play for Goldcorp.

Edited by Bloomberg

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