Mining company Barrick Gold is buying up Randgold Resources, setting up the opportunity to become the world’s largest gold miner in a deal worth $18.3 billion.
According to Reuters, the terms of the deal indicate that Randgold shareholders will receive 6.1280 new Barrick shares for each share they have of the New Jersey-headquartered company. As for Barrick shareholders, they’ll own roughly 66.6 percent of the new merged company, which will keep the Barrick name, according to the BBC.
The deal, dubbed Project Bulbul by Randgold, is the result of both companies wanting to cut costs and drive up profit margins. Both companies saw shares dip nearly 30 percent as the price of gold dropped more than 8 percent this year.
“Our industry has been criticized for its short-term focus, undisciplined growth and poor returns on invested capital. The merged company will be very different,” Mark Bristow, chief executive of Randgold, told the BBC.
“Its goal will be to deliver sector-leading returns, and in order to achieve this, we will need to take a very critical view of our asset base and how we run our business, and be prepared to make tough decisions.”
Bristow will become the chief executive of the merged company, which will be listed in New York and Toronto, the International Business Times reported. John Thornton, Barrick’s chairman, will be the executive chairman.
Although both Thornton and Bristow have voiced their positive outlooks regarding the merger, Kieron Hodgson, equity analyst at Panmure Research, told the IB Times that not all might be smooth sailing.
“Our opinion is that the proposed merger, instead of being based on merit, strength and strategic integration, is more akin to the proverbial ‘two drunks supporting each other at closing time,'” Hodgson said.
The deal, which saw its beginnings some three years back, is subject to regulatory approvals before being cleared, Reuters reported.
Barrick currently runs mining operations in the US, Peru, Chile and Argentina; Randgold has operations in Mali, Ivory Coast and the Republic of Congo.
Sourse: sputniknews.com
