The share price of Denver-based Newmont Mining rose more Friday than it had in the previous four weeks, following a published report that Barrick Gold Corp. may launch a bid to acquire Newmont.
A spokesman for Toronto-based Barrick, the world’s largest gold miner, dismissed the report as “idle speculation,” but several financial analysts said a merger of the two firms could make sense.
Newmont shares gained 79 cents Friday, nearly 2 percent, to $42.93 after Business Week’s “Inside Wall Street” column cited unnamed sources as saying Barrick could bid for Newmont to bolster its gold production and reserves.
“Everything about (the report) is idle speculation,” said Barrick spokesman Vince Borg.
“I can’t go on record as saying we’ll never make a bid or we might make a bid at some point in the future, but I can say this report should be dismissed.”
Newmont spokesman Omar Jabara said the company’s policy is “not to comment on rumors or speculation about what other companies may or may not do.”
J.P. Morgan Securities mining analyst John Bridges said in a report Friday that “it might be opportunistic for Barrick to look at Newmont” because an acquisition “would have significant synergies.”
“An underperformer”
Among the possible benefits, according to Bridges:
“A Barrick-Newmont combination would become a more powerful player in the industry through its size and could have a several-year improvement through harnessing synergies,” Bridges said in the report.
Newmont shares plunged 15 percent last year partly because the company cut its sales estimates three times and raised its forecast of operating costs at its mines.
Barrick overtook Newmont last year to become the largest gold producer with its $10 billion acquisition of Placer Dome Inc.
“Newmont, which has been an underperformer as a result of several problems, could be a nice takeover target,” said Gijsbert Groenewegen, founder of New York-based hedge fund Gold Arrow Capital Management LLC, which manages $17 million, including Barrick shares.
Newmont disclosed Friday that a verdict in Indonesia is scheduled to be announced April 4 in the criminal trial against the company and its chief Indonesian executive, Richard Ness, on charges of polluting coastal waters with mercury and arsenic.
Newmont and Ness have denied the charges and have presented testimony that several tests conducted by independent groups showed no pollution.
Indonesian prosecutors have recommended that Ness serve a three- year prison sentence if found guilty.
Bloomberg News contributed to this report.
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
