Barrick Gold Corp (GOLD - Get Report) pulled out of its $18 billion hostile bid for rival Newmont Mining (NEM - Get Report) Monday, saying instead that the world's biggest gold miners will form a joint venture in Nevada.
Barrick had said the deal, which it floated last month, would "unlock more than $7 billion net present value (pre-tax) of real synergies" and see it owning 55.9% of the combined company against 44.1% for Newmont investors. Newmont, for its part, had said its planned $10 billion tie-up with Goldcorp (GG) made more sense for the Toronto-based group.
"We listened to our shareholders and agreed with them that this was the best way to realize the enormous potential of the Nevada goldfields' unequalled mineral endowment, and to maximize the returns from our operations there," Barrick said in a statement.
"We are finally taking down the fences to operate Nevada as a single entity in order to deliver full value to both sets of shareholders, as well as to all our stakeholders in the state, by securing the long-term future of gold mining in Nevada."
Barrick shares were marked 3% higher at the start of trading Monday following the announcement that it was dropping its Newmont bid, and changing hands at $13.32 each. Newmont shares were marked 0.36% lower at $33.59 while Goldcorp jumped 2.33% to $10.97 each.
Spot gold prices have risen around 14% since mid-August, outpacing an essentially flat performance for the U.S. dollar index, a benchmark of the greenback against a basket of six global currencies.
Newmont and Goldcorp mined a collective total of 7.9 million ounces of gold last year, the companies said, and will control 75% of proven gold reserves in North and South America, a figure that could trigger scrutiny from anti-trust authorities in either Canada or the Untied States.