LONDON (AP) — Barrick Gold has agreed to buy Randgold Resources for $6.1 billion in stock to create the world’s largest gold miner, worth a combined $18 billion.
Investors will get 6.128 new Barrick shares for each Randgold share they hold. Shareholders in Barrick, which is based in Toronto, will own about 66.6 percent of the merged company, which will combine Randgold’s African mines with Barrick’s holdings in the Americas.
Nicholas Hyett, an analyst at Hargreaves Lansdown, says the deal marks a return to Africa for Barrick, which spun off its holdings there eight years ago.
Barrick’s more stable North American assets will reduce Randgold investors’ exposure to risky African markets. Hyett says that’s also welcome since Randgold had been struggling to find new projects of scale.
Barrick Gold Corp.’s stock rose more than 2 percent premarket trading, while shares of Randgold jumped more than 6 percent.
The deal is targeted to close by 2019’s first quarter.
Commenting on Monday’s announcement, John L. Thornton, executive chairman of Barrick, said “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.
“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.”
Mark Bristow, chief executive officer of Randgold, said “Our industry has been criticised for its short-term focus, undisciplined growth and poor returns on invested capital. 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 New Barrick Group will leverage some of the world’s best mines and talent to create real value for all stakeholders.”