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Barrick withdraws US$17.8b hostile bid for Newmont

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Barrick gold, silver and copper mines in Argentina's Andes mountains in Veladero, San Juan.Barrick is withdrawing its US$17.8 billion hostile takeover bid for Newmont Mining Corp, with the companies opting instead to forge a joint venture around their Nevada projects.

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Putting a gold "button" into a furnace to be further refined to form gold dore bars at Newmont Mining's Carlin gold mine operation near Elko, Nevada, US.

[NEW YORK] Barrick Gold Corp is withdrawing its US$17.8 billion hostile takeover bid for Newmont Mining Corp, with the companies opting instead to forge a joint venture around their Nevada projects.

The change came weeks after Barrick proposed an offer that would have created the world's largest gold producer. After Newmont's board rejected Barrick's bid to buy Newmont in an all-share deal, Newmont Chief Executive Officer Gary Goldberg proposed the joint venture as an alternative both companies could gain from.

Barrick's decision ends two weeks of animosity between the two largest gold producers, helping Newmont focus on securing shareholder approval for its offer to buy Goldcorp Inc. Newmont raised doubts about the Barrick bid proposal from the start, saying its previously announced agreement to take over Goldcorp offered better benefits.

"We listened to our shareholders and agreed with them that this was the best way to realise the enormous potential of the Nevada goldfields' unequaled mineral endowment, and to maximize the returns from our operations there," Barrick CEO Mark Bristow said in a statement Monday.

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Newmont rose 17 cents to US$33.88 in pre-market trading in New York. Barrick gained 2.4 per cent to US$13.24.

Even after more than a century and a half of exploration, Barrick and Newmont said in 2014 that there was plenty of hidden gold still to be uncovered in Nevada, which already accounted for a third of their output then and produced more of the metal than South Africa and Chile combined.

"This isn't about personalities,." Goldberg said in a telephone interview Monday. "This is about working together and delivering on behalf of, all of our stakeholders. So that's it for the relationship talk."

Mr Bristow had noted that the bulk of the US$7 billion synergies he envisioned from Barrick's merger with Newmont would come from the two companies' projects in Nevada. Goldberg had offered a joint venture in those projects instead, saying Barrick could take a 55 per cent stake, leaving Newmont the rest.

"We want these companies to really focus on realizing these synergies," said Simon Jaeger, a portfolio manager at Flossbach von Storch AG, one of the top five shareholders of both companies. "We weren't focused too much on the format. We were not in favor of the merger or a big transaction or a JV per se."

The hostile bid strengthened Barrick's position. When the joint venture was finally announced, the Toronto-based miner got a 61.5 per cent stake, leaving Newmont with just 38.5 per cent.

The decision by Barrick to withdraw its bid comes after rhetoric escalated into an ugly brawl between the two gold giants, with each side calling the other "desperate." Newmont said its previously announced agreement to take over Goldcorp Inc offered better benefits. Barrick CEO Bristow said his team could do a better job running his rival.

The gold industry's largest producers are on a deal-making spree after languishing bullion prices the past few years squeezed margins and spurred a search for higher quality mines. Companies such as Barrick are trying to boost reserves of the precious metal or win operational savings.

In September, industry leader Barrick agreed to buy Randgold Resources Ltd for US$5.4 billion. Three months later, Newmont announced its plan to purchase Goldcorp for $10 billion, which would leapfrog it into the leading gold-producer spot.

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