September 25, 2018

Going for the gold: Gold giant Barrick acquires its rival for $6B

Barrick agrees to acquire Randgold Resources for $6B as the company looks to get back on top in the gold production biz.

Barrick Gold agreed to buy Randgold Resources for $6B in an all-stock merger yesterday that will solidify Barrick as the world’s largest gold producer.

Still awaiting shareholder approval, the deal will give Barrick shareholders a 67% stake in the new company (Randgold investors keep 33%) giving them a market cap of $18.3B.

Gold mining ain’t what it used to be… 

And even giants are banding together to weather the storm. Gold prices continue to flounder worldwide, falling below $1.2k per ounce last month  in a 9% decline so far this year.

Barrick’s stock has fallen behind their closest production rival in recent years, as they decreased their gold production by more than 30% since 2013.

Now, they’re betting on Randgold’s ties to Africa

Barrick desperately needs to get back in the good graces of the resource-rich continent after selling off their African holdings 8 years ago.

Luckily for them, Randgold has a massive foothold in Africa, and Barrick is hoping their new partner’s dominant position will make up for production losses.

It’s helped so far…

Business Insider reports that the news raised stock prices for both companies; 2.7% for Barrick and 6.8% for Randgold.

Yeah, maybe gold isn’t really worth anything these days, but the merger gives the new company ownership over 5 of the top 10 gold mines, and, based on 2017 financial results, the new company would have pulled in a combined revenue of $9.7B with adjusted earnings of $4.7B.

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