A spat between Barrick Gold Corp. and Newmont Mining Corp. erupted into a public war of words, with the companies accusing each other of ruining their $13-billion (U.S.) merger.
Barrick said its American rival reneged on their deal and tried to change key provisions, including the location of the head office in Toronto.
Newmont disagreed with Barrick's version and faulted the Canadian company's incoming chairman John Thornton for not being constructive.
Over the years, the world's two largest gold producers have made several attempts to unite and cut expenses in Nevada, where they both own multiple mines.
The slump in the gold industry fuelled their latest merger ambitions, with the companies identifying about $1-billion in cost savings.
But they ultimately could not overcome two decades of personality clashes and cultural differences, which exploded into the public domain on Monday and likely killed any future merger discussions.
"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," Newmont's chairman Vincent Calarco said in an April 25 letter to Barrick's board and Mr. Thornton, posted on Newmont's website Monday. "Our efforts to find consensus have been rejected out of hand repeatedly."
The Colorado-based company cast most of the blame on Mr. Thornton, a former Goldman Sachs executive who is currently Barrick's co-chairman. It was also angered when Barrick's founder Peter Munk, who is due to retire as the miner's chairman on Wednesday, told the Financial Post that Newmont was extremely bureaucratic and unfriendly to shareholders.
"None of this suggests that we have the mutual respect or shared values today," the Newmont letter said.
Barrick said that the companies had signed a term sheet April 8, only to see Newmont back out of the three key elements of the deal: a Toronto-headquartered company, the composition of the combined company and the roles of the chairman, chief executive officer and lead director.
Under the terms of their latest proposal, Newmont's chief executive officer Gary Goldberg would have become CEO of the combined entity, Newmont's Mr. Calarco would have become vice-chairman and lead independent director, and Barrick's incoming chairman Mr. Thornton would have become executive chairman, sources had said.
The North American miners, which would have been called Barrick Newmont Mining, were getting ready to announce their deal ahead of Newmont's annual shareholder meeting April 23, sources said.
But talks broke down over which assets would have been spun off and Newmont wanted Mr. Thornton to assume the role of chairman, a position that would have stripped away some of his powers as executive chairman, sources said.
In the letter, Newmont said Mr. Thornton told the company twice that their merger process was "dead."
Mr. Thornton then sent Mr. Calarco an e-mail last week asking the American company to resume formal talks. But talks at the highest levels were not rekindled.
Barrick said in a statement that it still "believes the interests of shareholders are best served through the completion of this business combination."
Newmont's surprising public criticism of Mr. Thornton comes as the former banker gets ready to become Barrick's sole executive chairman.
Mr. Thornton spent his year as co-chairman listening to shareholder concerns and helping to improve the company's corporate governance, including its executive compensation arrangements. But in a blow to Barrick's efforts, the Canada Pension Plan Investment Board said it would vote against the miner's new pay schemes and cited concerns over Mr. Thornton's compensation.
A Barrick spokesman said the company has "received strong shareholder support" for its new executive compensation program and cited the support of two influential proxy advisory firms.