Randgold And Barrick To Merge In $18BN Deal, Creating World's Largest Gold Miner
Monday, September 24, 2018 at 06:22PM
Gold Prices

As gold prices cling stubbornly to the lowest levels in a year as US stocks continue their record-breaking tear, two of the world's biggest gold miners are sensing an opportunity. As the Financial Times reports, Canada’s Barrick Gold (the world's largest miner) is preparing to merge with Randgold Resources (its UK-listed rival) in an all-share deal that will create the world's biggest gold miner, with an $18 billion valuation and a dominant mining position in Africa.

Per the Wall Street Journal, Barrick shareholders will own 67% of Randgold, and Randgold investors will own 33% of Barrick. Put another way, Randgold shareholders will own 33.4% of the combined company, with the rest controlled by investors in Toronto-based Barrick. The deal still needs to be approved by shareholders.

More than the mining synergies (Barrick runs massive mines in Nevada and throughout South American while Randgold ha extensive operations in Mali and the Democratic Republic of Congo), WSJ and FT points out that the merger will bring together two outsize personalities in Barrick’s John Thornton, a former Goldman Sachs executive, and Randgold's Mark Bristow. Bristow and Thornton reportedly recently spent a month together hashing out the terms of the deal, though talks began all the way back in 2015. Should the deal close, Thornton will serve as chairman of the combined company while Bristow will take over as CEO.

According to the two companies, the combined firm would have generated revenue of $9.7 billion last year while adjusted EBITDA would have been $4.7 billion.

While Barrick has clung to its No. 1 spot, the company has struggled in recent years as its profitability has lagged behind Newmont Mining Corp., its closest rival by production volume. 

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Usually the predator sees a fall in stock price as they are viewed as having paid too much for the acquisition, but this morning both ABX and RRS prices were up around 5%.

Another Bull market in gold and this will be the 'go to' investment due to its size and liquidity, maybe?

 

 

 

 

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