HomeBusiness and policyBarrick Gold to acquire Randgold Resources for US$6 billion

Barrick Gold to acquire Randgold Resources for US$6 billion

The boards of Barrick Gold and Randgold Resources have announced they have reached agreement on a share-for-share merger of Barrick and Randgold to create an industry-leading gold company.

Under the terms of the merger, each Randgold shareholder will receive:

  • 6.1280 New Barrick Shares for each Randgold Share
  • This exchange ratio has been agreed based on the volume-weighted average prices of Barrick Shares traded on NYSE, and Randgold ADSs traded on NASDAQ, respectively, over the 20 trading days ended on 21 September 2018.

Following completion of the Merger, Barrick Shareholders will own approximately 66.6% and Randgold Shareholders will own approximately 33.4% of the New Barrick
Group on a fully-diluted basis.

Under the terms of the Merger, Barrick and Randgold have agreed that:

  • Randgold Shareholders will be entitled to receive a Randgold dividend for the 2018
    financial year of USD 2.00 per Randgold Share, subject to approval of the Board of
    Randgold
  • The Randgold Permitted Dividend is expected to be declared on or before the Effective Date, payable to Randgold Shareholders on or around the Effective Date by reference to the Scheme Record Time; and
  • subject to the discretion of the Barrick Board with respect to the declaration of
    dividends, Barrick Shareholders will receive a total 2018 annualized dividend of up to
    USD 0.14 per Barrick Share. A Barrick quarterly dividend of: (i) up to USD 0.03 per
    Barrick Share will be paid for the three month period ending 30 September 2018; and
    (ii) up to USD 0.05 per Barrick Share will be paid for the three month period ending 31 December 2018, in each case if, as and when declared by the Board of Barrick

Strategic rationale for the merger

The Boards of Barrick and Randgold believe that the Merger will create an industry-leading gold company with the greatest concentration of Tier One Gold Assets in the industry, the lowest total cash cost position among Senior Gold Peers,1 and a diversified asset portfolio positioned for growth in many of the world’s most prolific gold districts.

Based on Barrick and Randgold’s Closing Prices as of 21 September 2018 (being the last
business day prior to the date of this announcement), the New Barrick Group will have an
aggregate market capitalization of USD 18.3 billion.

In addition, based on the 2017 financial results for both companies, the New Barrick Group would have generated aggregate revenue of approximately $9.7 billion and aggregate Adjusted EBITDA2 of approximately $4.7 billion.

The New Barrick Group will, on completion of the Merger, have the following advantages:

Ownership of five of the world’s top ten Tier One Gold Assets by total cash cost,1 with two potential Tier One Gold Assets under development or expansion:

Tier One Gold Assets: Mark Bristow, Chief Executive Officer of Randgold (45%), LouloGounkoto (80%) and Pueblo Viejo (60%)
Potential to become Tier One Gold Assets: Goldrush/Fourmile and Turquoise Ridge (75%)

“The combination of Barrick and Randgold will create a new champion for value creation in the gold mining industry, bringing 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,” says John L. Thornton, Executive Chairman of Barrick.

“Our overriding measure of success will be the returns we generate and not the number of ounces we produce, balancing boldness and prudence to deliver consistent and growing returns to our fellow owners, a truly simple but radical and achievable concept.

“There are no premiums in the merger because we strongly believe in the opportunity to add significant value for our shareholders from the disciplined management of our combined asset base and a focus on truly profitable growth.”

“Our industry has been criticised for its short-term focus, undisciplined growth and poor
returns on invested capital,” says Mark Bristow, CEO of Randgold.

“The merged company will be very different. 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.

By employing a strategy similar to the one that proved very successful at Randgold, but on a larger scale, the Group will leverage some of the world’s best mines and talent to create real value for all stakeholders.”

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