Barrick and Newmont merger off
A squabble over the future of Australian assets, including the Kalgoorlie Super Pit, is derailing merger talks between the world's biggest gold-mining companies.
A plan for an all-stock merger between Barrick Gold and Newmont Mining was to be announced this week but talks broke down over the weekend.
The companies could not agree on how to spin off their jointly held assets in Australian and New Zealand, which include the iconic Goldfields mine, run by Kalgoorlie Consolidated Gold Mines.
Reports out of the US suggested the merger could be revived but not before yesterday's self-imposed deadline for an agreement.
Sources close to the deal were reported as saying Barrick was to offer Newmont shareholders a premium of 13 per cent more than Newmont's average share price over the latest 20 trading days.
The companies had agreed to that, and had nutted out a schedule of cost savings which would have seen $US1 billion a year stripped from the combined entity's operating costs, mostly from their mines in Nevada.
Toronto-based Barrick and America's Newmont have a combined worth of $US33 billion.
Spokesmen for both companies declined to comment on the merger talks but it is understood the boards wanted to have a deal announced before their imminent annual meetings.
Newmont's meeting is tomorrow and Barrick's a week later.
Toronto-based analyst for TD Newcrest, Greg Barnes, said the success of the merger depended on the value of the Super Pit-headlined spin-off, as well as the enlarged company achieving the envisaged cost savings.
"Without the savings, we see little merit in merging the two com- panies since production growth would remain challenging and the combined balance sheet would carry significant net debt," he said.
Under the fallen-through merger plan, the new company's chief executive would have been current Newmont boss Gary Goldberg.
Barrick co-chairman John Thornton would have been executive chairman, Newmont chairman Vince Calarco a lead director of the new company and Barrick chief executive Jamie Sokalsky head of the new spin-off.
The combined company would have been based in Toronto while keeping an operating headquarters in Colorado, where Newmont has its head office, sources claimed.
With agencies
