Bigger isn’t necessarily better for Barrick Gold in combo with Newmont
Yesterday, 02:45 PM ET · NEM
Newmont Mining (NEM +6%) shares are on the move because of a deal that isn’t happening – at least not yet; WSJ reported Friday that NEM was in advanced merger talks with rival Barrick Gold (ABX -3.5%) that had broken down.
J.P. Morgan hopes a deal happens: With overlaps in Australia and Peru plus bigger buying power helping to drive down costs, it thinks the combined entity could claim as much as $3B in savings, improve free cash flows and better service combined debt.
However, Cowen analysts see little benefit for ABX shareholders in such a merger: construction of Donlin, Goldrush, and the completion of Pascua Lama during 2016-19 would require additional balance sheet size, which could be the underlying motivation for a merger, but as with past mergers between the largest gold producers, it does not believe that being the biggest creates significant value for the shareholder.
var isMC=true; var adSize=’320×50′; var ord = Math.floor(Math.random()*10e12); var seekingalpha_ad_src=’http://ad.doubleclick.net/N6001/adj/sek.mobile/app;sz=320×50,320×250;x=x;tile=1;d=mobile;t=app;mcid=true;mcid=1682933;s=NEM;s=ABX;’+dart_my_vocation_and_profiles()+’ord=’+ord+’;dev=ip?’; document.write(”);
April 22nd, 2014 at 7:02 am
Bigger isn’t necessarily better for Barrick Gold in combo with Newmont
Yesterday, 02:45 PM ET · NEM