Will Barrick Gold's CEO Departure Revive Newmont Merger Talks?

The departure of Jamie Sokalsky means that John Thornton is in effect CEO of Barrick Gold.

Jul 21, 2014 at 3:29PM

Barrick Gold (NYSE:ABX) this week announced that its CEO Jamie Sokalsky will step down in September. Interestingly, Barrick has not announced a replacement for Sokalsky. Instead, the company has split the duties between two co-presidents. The management shakeup leaves more power in the hands of John Thornton, who succeeded Peter Munk as Chairman earlier this year. The big question is whether the departure of Sokalsky would revive merger talks between Barrick and Newmont Mining (NYSE:NEM).

Barrick's big shakeup
Barrick Gold announced major changes at the senior management level. Jamie Sokalsky, who had been in charge of Barrick for the last two years, will step down from the post of President and CEO effective September 15, 2014. Sokalsky's departure was anticipated after Barrick's merger talks with Newmont, which were apparently led by Chairman Thornton, fell apart. Reuters, citing sources familiar with the situation, reported that Thornton and Sokalsky were not on the best of terms, and therefore Sokalsky's departure is not surprising. What is surprising though is that Barrick has not named any replacement for Sokalsky.

Instead of appointing a new CEO, Barrick has split the role between Kelvin Dushnisky, who currently serves as Senior Vice President for Corporate and Government Affairs and Chairman of African Barrick Gold, and Jim Gowans, who currently serves as Executive Vice President and COO. Barrick says the reason behind the new management structure is that it will allow the company to meet the distinct demands and challenges of the mining industry in the 21st century.

Chairman Thornton noted that the structural changes put an even greater emphasis on operational excellence, and will accelerate the company's portfolio optimization and cost reduction initiatives, while fostering a partnership culture both inside the company and externally. What the splitting of the CEO role also means is that Thornton will have more powers. It could also possibly revive the merger talks with Newmont.

Thornton taking charge
Thornton became the Chairman of Barrick earlier this year following the departure of founder Peter Munk. The departure of Sokalsky and the fact that he is not being replaced suggest that Thornton is now in effect the CEO of Barrick. Thornton, though, has played down the issue, saying that the management shakeup doesn't change his role on iota and that he has no interest in being the CEO. However, there will certainly be changes in the way Barrick functions. Thornton, as I noted in a recent article, comes from a banking background. He already has some different ideas when it comes to running a gold mining company.

Earlier this year Thornton said that he would consider a hedging strategy, given the volatility in the price of gold. Barrick and other gold miners such as AngloGold Ashanti (NYSE:AU) had spent billions of dollars a few years ago to unwind their hedged positions. Since then, the gold mining industry has been averse to hedging. Barrick itself has maintained a no-hedge position since 2009. But Thornton believes that given the characteristics of a commodity like gold, it makes sense to hedge. It will be interesting to see if there are any changes in Barrick's policy toward hedging with Thornton now possibly in charge of the company. What will be more interesting to see is whether the merger talks with Newmont Mining are revived.

Merger talks
The merger talks between Barrick and Newmont ended earlier this year without a deal. The merger talks were apparently led by Thornton. The departure of Sokalsky has fueled speculation that the talks would be revived. This is because at the time the merger talks were on, there was speculation that Newmont's CEO Gary Goldberg would become the CEO of the merged company and Sokalsky would be in charge of the spun-off assets.

Following the management shakeup, Thornton has said that Barrick remains open to a merger with Newmont; however, the two companies are not in talks currently. But with Thornton effectively in charge of Barrick and given that he apparently led the merger talks earlier, it won't be surprising if the two companies return to the negotiating table. 

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Varun Chandan Arora has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers