Barrick Gold to acquire Randgold in a $6.5 million all-stock deal
26 Sep 2018
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Canada’s Barrick Gold Corporation on Monday announced that it has agreed to acquire Randgold Resources Limited in an all-stock deal valuing the Africa-focused miner at $6.5 billion, to create a new Barrick Gold with a market capitalisation of $19.4 billion.
The merger will create an industry-leading gold company with the greatest concentration of Tier One Gold Assets ... and the lowest total cash cost position among senior gold peers, supporting sustainable investment in growth and shareholder returns, Barrick Gold stated in a release.
The new $19.4 billion Barrick Gold will own five of the world’s 10 lowest-cost gold mines that would also help barrack overtake Newmont Mining Corporation, Agnico Eagle Mines Limited, Goldcorp Inc and Newcrest Mining Limited, according to the company.
In 2017, Barrick and Randgold combined produced 6.64 million ounces while the next largest gold miner, Newmont, produced 5.27 million ounces.
The two companies said they were aligned on their strategy with Chinese investors after Barrick said it would make a bigger push to attract investors in China.
Randgold has mines in Mali, Ivory Coast and the Republic of Congo, where it has been facing regulatory issues, a factor that Barrick’s Africa unit Acacia Mining has to deal with in Tanzania.
The deal marks the biggest transaction in years in the gold mining industry, where companies have come under fire from investors for poorly managing capital, forcing them to focus on costs while dampening enthusiasm for acquisitions.
“The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry, bringing together the world’s largest collection of Tier One Gold Assets, with a proven management team that has consistently delivered among the best shareholder returns in the gold sector over the past decade,” John L. Thornton, executive chairman of Barrick, said.
“Our industry has been criticised for its short-term focus, undisciplined growth and poor returns on invested capital. The merged company will be very different. Its goal will be to deliver sector leading returns, and in order to achieve this, we will need to take a very critical view of our asset base and how we run our business, and be prepared to make tough decisions,” Mark Bristow, chief executive officer of Randgold, said.
The merger is planned to be implemented by means of a court-sanctioned scheme of arrangement of Randgold Resources Limited and the Randgold Shareholders, with the entire issued and to be issued share capital of Randgold being acquired by Barrick.
Under the terms of the merger, each Randgold shareholder will receive 6.1280 New Barrick shares for each Randgold Share. Following completion of the merger, Barrick shareholders will own approximately 66.6 per cent and Randgold Shareholders will own approximately 33.4 per cent of the New Barrick Group on a fully-diluted basis.
Following completion of the Merger, John L. Thornton, executive chairman of Barrick, will become executive chairman of the New Barrick Group.
Mark Bristow, chief executive officer of Randgold, will become president and chief executive officer of the New Barrick Group.
Graham Shuttleworth, finance director and chief financial officer of Randgold, will become senior executive vice president and chief financial officer of the New Barrick Group.
Kevin Thomson, senior executive vice president, strategic matters of Barrick, will become senior executive vice president, strategic matters of the New Barrick Group.
Two-thirds of the directors of the board of the New Barrick Group will be nominated by Barrick, and one-third will be nominated by Randgold.
Shares in the New Barrick Group issued to Randgold Shareholders will be admitted to trade on the New York Stock Exchange and the Toronto Stock Exchange, subject to the approval or acceptance of each exchange.
The merger is subject to approval by both sets of shareholders, regulatory approvals and other customary closing conditions, and is expected to close by Q1 2019.
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