REUTERS: Newmont Mining Corp on Monday rejected rival Barrick Gold Corp's US$18 billion unsolicited offer, and instead proposed a joint venture in Nevada, the biggest gold and silver producing state in the United States.
A deal would have combined two of the biggest gold producers in the world and comes at a time when both companies are trying to bolster shrinking gold reserves to boost growth as well as take advantage of rising prices.
Newmont said its Canadian rival's all-stock offer was not in the best interest of its shareholders as it was offered at a discount.
Barrick's offer of 2.5694 of its common shares for each Newmont share was equivalent to about US$33 per share, which represented a discount of about US$3 to Newmont's closing price on Feb. 25.
Newmont shares have fallen more than 7 percent since Barrick's offer and are currently trading at US$33.74.
Newmont reiterated its plans to go ahead with its deal to buy smaller rival Goldcorp Inc, which it said is significantly more accretive to its shareholders compared to Barrick's proposal.
Barrick Chief Executive Officer Mark Bristow "has yet to prove he can successfully manage" a global mining company, Newmont's CEO Gary Goldberg said on a call. "Barrick is attempting to bite off substantially more than it can chew."
Bristow joined Barrick in January following the company's acquisition of London-based Randgold Resources. The deal set off a fresh wave of bids in the mining industry, including Newmont's offer for smaller miner Goldcorp, which put the Colorado-based firm on track to become the world's biggest gold producer, ahead of Barrick.
Barrick Gold was not immediately available for comment.
NEVADA JOINT VENTURE
Newmont said on Monday it submitted a joint venture proposal to Barrick for their operations in Nevada.
Newmont has 19 mines in Nevada, which are adjacent to Barrick's operations.
Barrick will hold a majority 55 percent stake in the new entity, while both companies will have equal representation in the management and technical committees, Newmont said.
The new terms come after Bristow last week raised concerns over management control in the proposed Nevada joint venture.
Reuters had reported in November that the miners were in talks to combine their operations in Nevada.
Barrick's shares were down nearly 1 percent at CUS$16.22 on the Toronto Stock Exchange.
(Reporting by Debroop Roy and John Benny in Bengaluru; Editing by James Emmanuel)