A deal between Barrick Gold (ABX)and Newmont Mining (NEM) might make sense, but it ain’t gonna happen as long as Barrick’s co-chairman keeps insulting Newmont in the press.
Bloomberg That was the gist of a letter sent by Newmont Mining to Barrick Gold’s board, ending the talks between the two gold mining giants.
While our team has found your management team's engagement to be constructive and professional, the same constructive nature cannot be said of our discussions with your Co-Chairman on certain fundamental strategic and structural issues over the past two weeks. Our efforts to find consensus have been rejected out of hand repeatedly. And, as we contemplated further dialogue, we read in the continuing reporting of the transaction in the financial press a pointed characterization of our company as "extremely bureaucratic and not shareholder-friendly." Nothing could be further from the truth. Moreover, none of this suggests that we have the mutual respect or shared values today that we believe are necessary for the enterprise that would result from the combination of our companies to realize its full potential.
It is, in fact, because of our deep commitment to our shareholders that we reluctantly have had to unanimously conclude that we need to put aside our attempts to resuscitate this initiative and should pursue our course as an independent company.
Sterne Agee’s Michael S. Dudas and Satyadeep Jain wonder if a deal is really dead:
We believe Barrick drove too much control while Nemwont’s Nevada asset base would likely provide more synergistic value. In releasing a letter notifying Barrick, Newmont’s Board highlighted displeasure with Barrick’s methods, especially in the press. We believe door remains slightly ajar for some sort of transaction, but requires a reset, in our view.
Shares of Newmont Mining have dropped 6.4% to $24.76 at 2:25 p.m., while Barrick Gold has fallen 3.4% to $17.28, both worse than the 2.3% decline in the Market Vectors Gold Miners ETF’s (GDX) 2.3% drop.
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