Canada’s gold miner Barrick Gold has agreed to buy Randgold Resources in a $18.3 billion deal that would create the world’s largest gold producer.
Following the merger, Barrick Gold will own five of the world’s 10 lowest-cost gold mines and have a market value of about $24 billion including debt. The new company will be listed in New York and Toronto.
The deal is one of the biggest in the gold mining industry in recent years. The transaction value at 4.58 billion pounds ($6 billion), or 48.5 pounds per share, matches Randgold’s market cap.
Currently, investors prefer to invest in the US dollar amid falling gold prices. This has a negative impact on the gold mining industry. Investors’ reluctance to treat the precious metal as a safe haven caused a 10% decline in gold prices, analysts say.
In the current year, both companies lost about a third of their market value. Negotiations about a possible merger started more than three years ago. The deal between the gold companies is set to be approved by regulatory bodies. Barrick Gold shareholders will own about 66.6% of the new company, while Randgold shareholders will get the remaining 33.4% on a fully diluted basis.
