Barrick Gold Corp. (TSX:ABX) has formally proposed a takeover of Newmont Mining Corp.(NYSE:NEM) in a blockbuster all-stock deal valued at $18 billion U.S.
Under the terms of the deal, Barrick Gold is offering 2.5694 shares for each Newmont Mining share. If the deal is successful, Barrick would own 55.9% of the combined entity. Based on Barrick’s closing share price of $13.04 U.S. on the New York Stock Exchange Friday, its offer is worth $18 billion U.S.
In a news release issued Monday morning, Barrick Gold said uniting with Newmont Mining is a "logical and long overdue imperative for shareholders." Barrick Gold added that synergies achieved in a takeover would be 7.5 times larger than what Newmont Mining can expect from its impending purchase of Goldcorp (TSX:G).
Combining Barrick Gold and Newmont Mining has been a frequent source of speculation, largely because of the companies’ respective footprints in Nevada. In its announcement on Monday, Barrick Gold said "the efficient rationalization" of assets could allow for more than two decades worth of profitable production in that state.
In its own news release, Newmont Mining said that its Board of Directors will "fully evaluate" Barrick Gold’s proposal, while noting its deal with Goldcorp is “the best opportunity” for shareholders. The company also pointed out it previously rejected approaches by Barrick Gold and Randgold Resources Ltd. prior to their tie-up.
