Canadian mining giant Barrick Gold has bought Africa-focused rival Randgold Resources to create a global industry champion worth $18.3 billion, the pair said on Monday.
The blockbuster all-share deal was described as a merger but is effectively a takeover because Barrick investors will own a majority 66.6-percent stake. Randgold shareholders will hold the rest.
The enlarged company, keeping the Barrick name, will be traded in New York and Toronto. Randgold’s London listing will be cancelled.
“The boards of Barrick Gold Corporation and Randgold Resources Limited are pleased to announce that they have reached agreement on the terms of a recommended share-for-share merger … to create an industry-leading gold company,” read the statement.
Randgold shareholders will receive 6.1280 new Barrick shares for every Randgold share under the terms of the deal.
Barrick executive chairman John L. Thornton will take up the same role at the new company, while Randgold chief executive Mark Bristow will retain his CEO position.
“The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry,” said Thornton in the statement.
He added that the gigantic deal would bring “together the world’s largest collection of tier one gold assets, with a proven management team that has consistently delivered among the best shareholder returns in the gold sector over the past decade”.
– ‘Struck gold’ –
The group will have a combined stock market capitalisation of 18.3 billion, and total annual revenues of approximately $9.7 billion.
“Mr Bristow has struck gold, in a sense, as he now becomes the boss of the world’s biggest gold miner,” said AJ Bell investment director Russ Mould.
“The 59-year-old has arguably reached the pinnacle of his career with this deal, yet he will be under considerable pressure to make sure shareholders are not left with an inferior company to a standalone Randgold.”
Monday’s news sent Randgold’s share price soaring 3.6 percent to 5,100 pence in late morning deals on London’s falling FTSE 100 index.
“The merger of Barrick and Randgold creates a goldmining giant,” said Nicholas Hyett, equity analyst at stockbroker Hargreaves Lansdown.
“From Randgold’s perspective the deal diversifies exposure away from high-risk African markets and towards Barrick’s more stable North American assets. Given recent headwinds, that is welcome.”