Just at the moment in which the stock market crisis induces savings and asset managers to move towards investments in gold, the merger of the century between the Canadian Barrick and the British Randgold arrives which will give life to a gold giant that will have 10 among the most profitable mines in the world.
Between today and Wednesday, the meetings of the two companies will pronounce on the merger which, if approved, will give rise to a 20 billion dollar operation and to a new company (New Barrick) with a production capacity of 187 tons per year, i.e. higher than that of Canada or South Africa.
Above all, the Canadians hope to resurrect their legend and regain leadership in the world but, as Il Sole 24 Ore comments, it is not an easy operation. The current CEO of Barrick, John Thornton, a former Goldman Sachs banker who will become president of the new company, revealed that he had courted his neighbor, the CEO of Randgold, the legendary Mark Bristow for three years, who will take over the leadership of the giant which will emerge from the merger. To do so Thornton had to promise Randgold $6 billion, an extra dividend and 66% in stock to his partners.
Despite the rediscovery of gold as a safe haven but also as an investment asset, the gold market – which has seen prices fall by 6% since the beginning of the year – remains a complicated sector but Bristow has undisputed skills and the his company – Randgold – is the only gold company to have never closed a quarter with a loss since 1995 and on the Stock Exchange it shines like no other: since 2000 it has gained 4.000% on the London stock exchange and 120% in the last decade while Barrick Gold lost 70%. But Randgold has also had its problems lately and has lost 12% on the stock market in the last 30 months.
Now the wedding promises a relaunch. If they are roses they will flourish.
