US-based gold miner Newmont Mining announced last week that it had terminated a potential merger with the world’s largest gold producer Barrick Gold, and published a letter it sent to Barrick in which it criticised co-chairperson John Thornton for his “unilateral declaration” that the negotiations were “dead”.

Last week, Barrick released a statement in which it confirmed media speculation that it 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.

Barrick said that it believed the interests of its shareholders were best served through completing the business combination, which could result in creating a gold-mining behemoth.

However, Barrick said that Newmont's board had determined that the interests of Newmont's shareholders would best be served by remaining independent.

In his letter to Barrick’s board, Newmont chairperson Vincent Calarco said that over the past number of months, the two companies had been working hard to find a basis on which they could merge and realise 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 realise 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,” Calarco said.

He went further to accuse Thornton of repeatedly rejecting out of hand Newmont’s efforts to find common grounds.

“… as we contemplated further dialogue, we read in the continuing reporting of the transaction in the financial press a pointed characterisation 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 realise its full potential,” Calarco said.

Newmont stressed that it was, in fact, because of its commitment to its shareholders that it had to conclude that the company needed to put aside its attempts to resuscitate the initiative and should pursue its course as an independent company.

Later in the day, Barrick hit back, fingering Colorado-based Newmont for reneging on three foundational elements of the signed term sheet, including the location of the head office of the merged company in Toronto; the identification of any specific assets that would be included in a spin-off company; and the carefully constructed governance arrangements, particularly regarding the roles and authority of the chairperson, 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 spin-off and further rationalisation of certain of the companies’ combined assets,” Barrick said.

Barrick founder and outgoing chairperson Peter Munk last week criticised potential takeover target Newmont in an interview with the National Post newspaper, saying the US miner was “not shareholder-friendly”.