Barrick bids $18 billion for Newmont in gold mega-merger

[February 25, 2019]   (Reuters) - Canada's Barrick Gold Corp offered to buy U.S. rival Newmont Mining Corp for nearly $18 billion in stock on Monday, in a deal that would combine the world's two largest gold producers.

Deal-making in the gold industry is growing after remaining dormant for many years. Barrick bought Randgold Resources in a $6 billion deal last month, setting off a wave of deals including Newmont's $10 billion deal for Canada's Goldcorp.

Barrick's acquisition of Newmont will be contingent upon the company scrapping its agreement with Goldcorp, Barrick said, adding that its offer was a "significantly superior" option for Newmont shareholders.

"The combination of Barrick and Newmont will create what is clearly the world's best gold company, with the largest portfolio of Tier One gold assets," Barrick Chief Executive Officer Mark Bristow said in a statement.

"Most important, it will enable us to consider our Nevada assets as one complex," he said.

One of Newmont's chief areas of operations is Nevada, the largest U.S. gold- and silver-producing state, where Newmont's 19 mines are adjacent to Barrick's own operations.

The deal also comes amid a rise in gold prices, which have climbed some 11 percent since October.

Under Barrick's proposal, Newmont shareholders would receive 2.5694 common shares of Barrick for each Newmont share. That translates to a price of about $33 per Newmont share, valuing the company at $17.85 billion, according to Reuters calculations.

Mark Bristow, chief executive officer of Barrick Gold, speaks during an interview at the Investing in African Mining Indaba conference in Cape Town, South Africa February 5, 2019. REUTERS/Mike Hutchings/File Photo

Newmont shareholders would hold about 44 percent of the outstanding shares of the combined company.

Neither Newmont nor Goldcorp could immediately be reached for comment outside usual business hours.

Its shares rose 1.4 percent to $37 in early trade on Monday.

Barrick also said the new company would match Newmont's annual dividend of 56 cents per share which, based on the offer, will represent a pro-forma annual dividend of 22 cents per Barrick share.

Barrick said last week it was considering making an all-stock bid for Newmont. Newmont had declined to comment on the matter.

Newmont Mining said on Sunday that Barrick, which already owns a tiny fraction of the U.S. mining company, intends to propose lowering the ownership threshold needed to call a meeting of Newmont shareholders.

(Reporting by John Benny in Bengaluru; Editing by Sai Sachin Ravikumar)

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