Canada's Barrick Gold Corp offered to buy U.S. rival Newmont Mining Corp for nearly $18 billion in stock on Monday, in a hostile takeover that seeks to combine the world's two largest gold producers.
Newmont responded by saying it had already reviewed and rejected possible deals with Barrick and said its own $10 billion pending purchase of Goldcorp Inc made more business sense.
Barrick said its acquisition of Newmont would be contingent on the company scrapping the deal to buy Toronto-listed Goldcorp, adding its offer was a "significantly superior" option for Newmont shareholders.
"The combination of Barrick and Newmont will create what is clearly the world's best gold company, with the largest portfolio of Tier One gold assets," Barrick Chief Executive Officer Mark Bristow said in a statement.
"Most important, it will enable us to consider our Nevada assets as one complex," he added.
In Newmont's statement and a pair of media interviews, its Chief Executive Gary Goldberg pointed to a joint venture as a better way of extracting value from the two companies' mines in Nevada, the United States' largest producer of gold and silver.
Newmont has 19 mines in the state, adjacent to Barrick's own operations and Reuters had reported in November that the miners were in talks to combine their operations in the state.
Still, Newmont's board of directors would "fully evaluate the Barrick proposal and respond in due course," the company said.
Deal-making in the gold sector, dormant for years as companies focused on cutting costs, took off last month when Barrick paid $6.1 billion to buy another rival Randgold Resources.
That set off a fresh wave of deals, including Newmont's offer for smaller miner Goldcorp, which would make the Colorado-based firm the world's top gold miner if it closes as planned next quarter.
The deals also come at a time when gold prices are rising - some 11 percent since October.
Shares in both Newmont and Barrick were largely unchanged in early trade.
Under Barrick's proposal, Newmont shareholders would receive 2.5694 common shares of Barrick for each Newmont share. That translates to a price of about $33 per Newmont share, valuing the company at $17.85 billion, according to Reuters calculations.
Newmont shareholders would hold about 44 percent of the outstanding shares of the combined company.
Barrick also said the new company would match Newmont's annual dividend of 56 cents per share which, based on the offer, will represent a pro-forma annual dividend of 22 cents per Barrick share.