- Newmont Mining (NEM +6%) shares are on the move because of a deal that isn't happening - at least not yet; WSJ reported Friday that NEM was in advanced merger talks with rival Barrick Gold (ABX -3.5%) that had broken down.
- J.P. Morgan hopes a deal happens: With overlaps in Australia and Peru plus bigger buying power helping to drive down costs, it thinks the combined entity could claim as much as $3B in savings, improve free cash flows and better service combined debt.
- However, Cowen analysts see little benefit for ABX shareholders in such a merger: construction of Donlin, Goldrush, and the completion of Pascua Lama during 2016-19 would require additional balance sheet size, which could be the underlying motivation for a merger, but as with past mergers between the largest gold producers, it does not believe that being the biggest creates significant value for the shareholder.