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.
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.
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.
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.