Shares in Randgold Resources (LON:RRS) have jumped in London in today’s session as the company agreed a merger deal with Canada’s Barrick Gold. The deal will see shareholders in the London-listed company own 33.4 percent of the enlarged entity.
As of 10:35 BST, Randgold’s share price had added 5.75 percent to 5,206.00p, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into the red and currently standing 0.18 percent lower at 7,477.05 points. The group’s shares have lost a little over 30 percent of their value over the past year, as compared with about a 2.3-percent gain in the Footsie.
Randgold and Barrick unveil merger
Randgold announced in a statement this morning that it had agreed a share-for-share merger deal with Barrick Gold. The tie-up will see Barrick shareholders own about 66.6 percent of the combined company, with the FTSE 100 group’s shareholders owning the 33.4-percent balance. Randgold’s Chief Executive officer Mark Bristow will become President and CEO of the New Barrick Group, while John L. Thornton, Executive Chairman of Barrick, will become Executive Chairman.
The companies expect the merger to close by the first quarter of next year.
Analysts weigh in on proposed tie-up
Proactive Investors quoted Nicholas Hyett, equity analyst at Hargreaves Lansdown, as commenting that from Randgold’s perspective, the deal diversified “exposure away from high-risk African markets and towards Barrick’s more stable North American assets. Given recent headwinds that’s welcome”.
“The regulatory shakeup in the Democratic Republic of Congo has dented the share price and Randgold has also struggled to find new projects of scale, potentially holding up dividend growth in the years ahead,” Hyett continued, adding that with Randgold having been trading at a premium to Barrick in recent weeks, “the deal does favour the smaller partner”.