Canada’s Barrick Gold Corp. (ABX) has agreed to obtain its London-listed rival Randgold Resources Ltd. (GOLD) in a share-for-share merger.
In a affirmation, Barrick said the two companies will combine to create the world’s foremost producer of gold. The combined firm will have a market value of $18.3 billion. Beneath the terms of the deal, Randgold shareholders will receive 6.1280 new Barrick slices in return for each Randgold share. Barrick shareholders will own less 66.6 percent of the newly formed company, leaving Randgold shareholders with just about 33.4 percent ownership. (See also: How to Invest in Gold: An Investors Instruct)
If all goes to plan and the merger wins approval from both regulators and shareholders, the New Barrick Clique is expected to start trading on the New York Stock Exchange and the Toronto Forebear Exchange in the first quarter of 2019. Randgold’s long-term chief leadership Mark Bristow will serve as CEO of the new company, while Barrick’s John Thornton desire become the executive chairman.
Shares in both companies rose a little in pre-market trading.
“The combination of Barrick and Randgold will create a new victor for value creation in the gold mining industry, bringing together the magic’s largest collection of Tier One Gold Assets, with a proven governance team that has consistently delivered among the best shareholder considerations in the gold sector over the past decade,” said Thornton, Barrick’s management chairman.
The merger comes at a difficult time for the two companies. Both attired in b be committed to lost about a third of their market capitalizations over the over year as Barrick was criticized for its strategy and Randgold was impacted by several operational distributions, including a strike at one of its biggest mines.
Bristow, the new CEO of the combined Barrick and Randgold, sought to bolster investors that the merger will turn both companies into a uncountable efficient and profitable entity.
“Our industry has been criticized for its short-term cynosure clear, undisciplined growth and poor returns on invested capital,” he said. “The blended company will be very different. Its goal will be to deliver sector unequalled returns, and in order to achieve this, we will need to take a simple critical view of our asset base and how we run our business, and be prepared to make leathery decisions.” (See also: 8 Reasons To Own Gold.)