Barrick Gold and Newmont Mining issued press releases on April 28 acknowledging that merger discussions between the two companies had been in progress for several weeks but that the discussions had been terminated at Newmont’s initiative. Reports of the discussions had been widely circulated in the financial press, beginning with a Wall Street Journal report on April 18. However, those reports had not been confirmed by the companies prior to their April 28 statements.

Barrick and Newmont are the world’s two largest gold producers. Barrick produced 7.17 million oz of gold in 2013; Newmont produced 5.07 million oz.

Barrick’s April 28 statement said, “Barrick Gold Corp. announced today that it has been informed by Newmont Mining Corp. that its board has decided to terminate Newmont’s merger discussions with Barrick, which have been widely reported by the news media over the last week.

“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.”

Newmont responded by releasing a letter dated April 25 sent by Newmont Chairman Vincent A. Calarco to Barrick’s Board of Directors and specifically to the attention of its board co-chairman, John L. Thornton.

The letter said: “Over the past number of months, our two companies have been working hard to find a basis on which we could merge and realize their combined strengths. 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.

“Our board has met a number of times since we were twice told definitively last Thursday by your co-chairman that the process in which we had been engaged to find a basis to merge our two companies was ‘dead.’

“As you would expect, that unilateral declaration made us question whether we actually shared the vision and values that are necessary to forge a successful new company. Notwithstanding that, we persevered.

“While our team has found your management team’s engagement to be constructive and professional, the same constructive nature cannot be said of our discussions with your co-chairman on certain fundamental strategic and structural issues over the past two weeks. Our efforts to find consensus have been rejected out of hand repeatedly. And, as we contemplated further dialogue, we read in the continuing reporting of the transaction in the financial press a pointed characterization of our company as ‘extremely bureaucratic and not shareholder-friendly.’

“Nothing could be further from the truth. Moreover, none of this suggests that we have the mutual respect or shared values today that we believe are necessary for the enterprise that would result from the combination of our companies to realize its full potential.

“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,” the letter concluded.

Within hours of Newmont’s release, Barrick responded with a statement that said: “Barrick…confirms that the company had negotiated a term sheet for a proposed merger between Barrick and Newmont, which was agreed upon and signed by both parties on April 8.

“Since then, Newmont has sought to renege on three foundational elements of the signed term sheet: the location of the head office of the merged company in Toronto; the identification of any specific assets that would be included in a spinoff company; and the carefully constructed governance arrangements, particularly with respect to the roles and authority of the chairman, the lead director and the CEO.

“Both companies were in full agreement that the merger would produce substantial added value for shareholders, through unique synergies that can only be achieved by combining Barrick and Newmont, and the spinoff and further rationalization of certain of the companies’ combined assets.”