Is Barrick Trying To Lower Newmont's Stock Price With Its Hostile Takeover Tactic?
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(Kitco News) - Barrick’s move “makes no sense” and could be a distraction to lower Newmont’s stock price, according to Franco-Nevada chairman Pierre Lassonde.
“What's happening has never been seen in history. Frankly, it's the first time I've ever seen a hostile at a discount to the stock price. It makes no sense,” Lassonde told Kitco News at the BMO Global Metals & Mining Conference. “They seem to be throwing smoke bomb left, right, and center to distract people from the ultimate aim may be to get the Newmont share price to underperform to give them the chance to actually do a bid.”
The reality, however, is that if you are a Newmont shareholder, you would not be interested in Barrick, Lassonde pointed out.
“When you look at the two companies, over the last four years after the last dust off between Barrick and Newmont, the Newmont shares have gone up 65% while Barrick has gone down 22%,” Lassonde said. “So who has been the better steward of shareholder money? Barrick or Newmont? So if you're a Newmont shareholder, why would you be attracted to the Barrick shares?”
When it comes to the existing merger between Newmont and Goldcorp, which is still scheduled to be completed in the second quarter of this year, Lassonde admitted that he likes the deal.
“I've looked at it in detail and I like the combination. Goldcorp was kind of hamstrung. They did not have a great balance sheet, they did not have the operators to operate their mine, and their stock price was a third of what it used to be. However, they do have great projects. They have one of the best copper-gold deposit to be developed, they’ve got some high-grade mines, and Newmont got the operators,” Franco-Nevada chairman stated.
As a piece of advice, Lassonde suggested that Barrick’s CEO Mark Bristow focus on the mines he has at Barrick, adding that he “doesn’t need more distraction.”