Gold deal: Barrick to buy Homestake for $2.3 billion
TORONTO (AP) – Barrick Gold Corp. is acquiring Homestake Mining Co. for $2.3 billion in an all-stock deal that will create the world’s second-largest gold producer.
”This strategic merger combines the operational, financial and human resources of two great companies to create the pre-eminent global gold mining company,” said Randall Oliphant, chief executive of Barrick.
Just over half of the new company’s assets are in North America and Australia, with 33 percent in South America and 13 percent in Tanzania.
Its major properties include the Goldstrike property in Nevada, Pierina mine in Peru and Bulyanhulu mine in Tanzania, along with the Eskay Creek and Hemlo Mines in Canada and Kalgoorlie mine and Yilgarn operations in Australia.
Toronto-based Barrick produced more than 3.7 million ounces of gold last year, while Homestake, based in Walnut Creek, Calif., produced more than 2.2 million ounces.
According to Barrick, the combined company produced gold at the equivalent of $156 an ounce, based on 2000 pro forma results. In contrast, gold was trading at $272.90 an ounce Monday in London.
The new company will rank only behind London’s Anglo American PLC in terms of size.
Barrick is offering to exchange 0.53 Barrick share for each of Homestake’s 263.3 million outstanding shares, a value of $8.71 and a 31 percent premium based on Homestake’s closing price of $6.65 Friday on the New York Stock Exchange.
Shares of Homestake surged $1.35, or 20 percent, to $8 in early trading Monday.
Barrick shares closed at 25.05 Canadian dollars ($16.48) on the Toronto Stock Exchange on Friday. Trading was halted Monday pending the announcement.
The companies said Monday the merger will produce about $55 million in savings beginning next year, mostly from lower taxes and reduced exploration and administration expenses.
The boards of both companies have unanimously approved the transaction, which still needs regulatory approval. It is expected to be completed by the end of the year.
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