U.S.-based Newmont Mining Corp. has called of merger talks with Barrick Gold Corp., a deal which would have combined two of the world's largest gold producers, the Canadian company said Monday.
"Although Barrick believes the interests of shareholders are best served through the completion of this business combination, Newmont's board has determined that the interests of Newmont's shareholders are best served by remaining independent," Barrick said in a statement.
Several reports last week, citing unidentified sources, suggested the companies were working towards a deal ahead of Barrick's annual meeting planned for Wednesday when founder and chairman Peter Munk will step down.
However, the talks apparently hit a snag and broke down.
For its part, Newmont released Monday a letter it sent to Barrick co-chairman John Thornton and the gold miner's board of directors that blamed the Canadian company for the breakdown.
"While we were hopeful that we could achieve that goal, it has become evident to us over the past several weeks that the type of constructive, mutually respectful and partnership-oriented relationship necessary to realize the potential benefits of that combination does not yet exist," Newmont chairman Vincent Calarco wrote.
"It is, in fact, because of our deep commitment to our shareholders that we reluctantly have had to unanimously conclude that we need to put aside our attempts to resuscitate this initiative and should pursue our course as an independent company," Calarco said.
A combination of Barrick and Newmont would have created a gold miner with nearly 11 million ounces of annual production.
Merger years in the planning
Long-speculated about, a merger would have allowed the companies to combine their operations in Nevada and save millions in overhead, supply contracts and staffing.
In a recent interview with Bloomberg TV, Munk said the companies have talked several times about a deal over the years and that it has "always made sense."
Barrick has struggled in recent years and its stock trades for less than half of what it did less than two years ago.
The company has reported losses the last two years as it took US$6.3 billion in impairment charges in 2012 and another US$12.7 billion last year.
Barrick was forced to stop work at its Pascua-Lama project in South America last year after massive cost overruns and a court ruling that put construction on hold until Barrick's environmental commitments and work to protect the water systems is completed.
In recent months, Barrick shed what it deemed non-core operations, selling several smaller mines in Australia, a minority stake in another one in Nevada as well as a portion of its stake in African Barrick Gold, and raised nearly $3 billion in an stock offering that was used to repay debt.
The company also revamped its board and its executive compensation process after shareholders turned down an advisory vote on Barrick's approach to executive pay at its annual meeting last year.