Barrick Gold (TSX: ABX; NYSE: ABX) and Randgold Resources (LON: RRS; NASDAQ: GOLD) have agreed to a share-for-share merger to create the New Barrick Group in a deal valued at US$18.3 billion.
Randgold shareholders will receive 6.12 new Barrick shares and a US$2 dividend for the 2018 financial year for each held Randgold share. Current Barrick shareholders will own about two-thirds of the new company.
Randgold CEO Mark Bristow and Randgold chief financial officer Graham Shuttleworth will retain their positions in the new company.
New Barrick will own five of the world's 10 lowest cash cost gold mines including Cortez and Goldstrike in Nevada, Kibali and Loulo-Gounkoto in the Democratic Republic of Congo and Pueblo Viejo in the Dominican Republic.
Randgold reported a US$50 million profit for 2018's second quarter; Barrick reported a US$94 million loss.
Barrick followed up the announcement by agreeing to a mutual investment with Shandong Gold (SHA: 600547) worth up to US$300 million. The two companies are equal joint-venture partners at the Veladero gold mine in Argentina. Shandong has expressed interest in Barrick's Pascua-Lama gold project on the Argentina-Chile border and is evaluating the project for possible synergies with Veladero.
Shares of Barrick are currently trading at $13.52 with a 52-week range of $12.54 to $21.03. The company has a $15 billion market capitalization.
Shares of Randgold are currently trading at $88.58, with a 52-week range of $78.48 to $129.21. The company has an $8.1 billion market capitalization.
Shares of the newly formed company will trade on the Toronto Stock Exchange and the New York Stock Exchange.
The companies expect to close the merger by 2019's first quarter.