Canada’s Barrick Gold Corp has agreed to buy Randgold Resources Ltd in an all-stock deal valuing the Africa-focused miner at $6.5 billion, to create the world’s largest gold producer in an industry under investor pressure to put capital to good use.
The new Barrick company, which will be listed in New York and Toronto, will own five of the world’s 10 lowest cost gold mines and have market value of $19.4 billion based on Monday trading. That would make it the world’s biggest gold miner by market capitalization, overtaking Newmont Mining Corp, according to Reuters calculations.
The deal marks the biggest transaction in years in the gold mining industry, where companies have come under fire from investors for poorly managing capital, forcing them to focus on costs while dampening enthusiasm for acquisitions.
Randgold closed up 6 percent, making it the biggest gainer in London’s wider mining index and valuing it at 4.93 billion pounds ($6.5 billion). Shares of Barrick, the world’s second largest gold producer, were up 6.3 percent in afternoon trade in Toronto.
“Randgold has the agility and swift-footedness of a younger and smaller company, much like Barrick in its early years, while Barrick has the infrastructure and global reach of a large corporate company,” Barrick Chairman John Thornton said in a conference call.