NYSE-listed Newmont Mining Corporation’s board of directors has unanimously rejected NYSE- and TSX-listed Barrick Gold Corporation’s unsolicited, all-stock negative premium proposal to acquire Newmont, which the board felt was not in the best interest of shareholders.
The Newmont board undertook a comprehensive review of the offer, in consultation with its financial and legal advisers, and found that Barrick’s proposal did not constitute a superior proposal, as defined in the arrangement agreement between Newmont and the NSE- and TSX-listed Goldcorp.
Newmont previously said a proposed combination with Goldcorp represented a superior value creation opportunity to generate long-term value through an unmatched portfolio of world-class operations, projects, exploration opportunities, reserves and talent.
“Unlike Barrick, Newmont-Goldcorp will be centred on the world’s most favourable mining jurisdictions and gold districts. The combination with Goldcorp is significantly more accretive to Newmont’s shareholders on all relevant metrics, compared with Barrick’s proposal, even when factoring in Barrick’s own synergy estimates.
“Realising value through Barrick’s proposal for Newmont’s shareholders hinges entirely on a new management team that lacks global operating experience and is only two months into its own transformational integration,” stated Newmont CEO Gary Goldberg.
Further, the company said the Goldcorp transaction would generate twice the accretion to Newmont’s net asset value (NAV) per share, compared with Barrick’s proposal, even when factoring in Barrick’s “unsubstantiated synergy assumptions”.
“Barrick’s proposal is 4% dilutive to Newmont’s NAV per share, before any synergies. The value creation claimed in Barrick’s proposal relies entirely on the delivery of synergies from a management team that lacks global operating experience and is only two months into its integration effort with Randgold Resources.”
Newmont also mentioned that Barrick operated in some unfavourable and high-risk jurisdictions, whereas Newmont-Goldcorp’s assets would be located in favourable mining jurisdictions and prolific gold districts on four continents.
Barrick last month launched a $17.8-billion proposed hostile takeover of Newmont, with president and CEO Dr Mark Bristow saying that there was potential to unlock more than $7-billion in synergies.
Nevada JV
However, Goldberg said Newmont has also last week submitted a joint venture proposal to Barrick with regard to Newmont’s operations in Nevada. This proposal would enable both companies’ shareholders to realise the available synergies, while avoiding the risks and complexities associated with Barrick’s buyout proposal.
Newmont proposed that Barrick hold an economic interest equal to 55% and Newmont-Goldcorp 45% of the Nevada assets.
Meanwhile, Newmont’s combination with Goldcorp is expected to close in the second quarter of the year.