THE proposed merger of Barrick Gold with Randgold Resources took an enormous forward step today after 99% of shareholders in the Canadian miner voted in favour of the deal – a decision executive chairman, John Thornton, described as “important”.
“Today marks an important step in our journey of taking Barrick ‘back to the future’,” he said in a statement. “The combination of Barrick and Randgold will create the compelling gold investment,” he added.
The vote was to ask shareholders to approve the issuance of common shares in Barrick as well as the continuance of Barrick to the Province of British Columbia under the Business Corporations Act. The merger is expected to be completed on January 1, 2019 provided it wins approval by Randgold shareholders.
The success of the Barrick vote was evident as early as October 11 after Reuters quoted Joe Foster, portfolio manager at Van Eck, as saying: “I look at the potential of what Barrick can become with Mark Bristow running the company … I believe they can make it work”. Van Eck is the biggest investor in Barrick and No. 2 holder in Randgold.
The proposal hasn’t won universal support, however. Stating this was “… a bad deal for Randgold shareholders”, Standard Bank analyst, Adrian Hammond, said shortly after the merger proposal that Randgold had achieved its success by means of slow organic growth where the focus has been on exploration, rather than size.
“Combining its assets with a much larger suite that requires restructuring will fundamentally challenge the Randgold way and premium,” he said. “As it stands, we think this deal is really about throwing a life-line to Barrick combined with an exit strategy for senior management of Randgold”.
All eyes then on November 7 when Randgold shareholders meet to vote on the deal. The firm’s extraordinary general meeting of November 5 has been adjourned following a move to increase the 2018 dividend – designed as a sweetener to the transaction as well as a statement of intent regarding future returns the combined entity might make.
Randgold is to publish its third quarter numbers tomorrow.
On November 1, South Africa’s Competition Tribunal gave its unconditional clearance for the merger of the two companies.
