Australian gold miner Newcrest supports Newmont’s $17.8 billion offer

Newcrest Mining Ltd, a gold mining company based in Australia, has said that it will support Newmont Corp in its AUD 26.2 billion takeover deal. The takeover has been labeled as one of the largest buyouts globally so far in 2023.

Newcrest supports Newmont’s takeover deal

The takeover deal by Newmont is subject to approval from the shareholders of the two companies. The deal should also secure approval from the relevant regulatory bodies. If this deal is approved, it will increase the gold output at the company to nearly double what is produced by its nearest rival.

Newmont’s largest competitor is Barrick Gold Corp. It will also propel the miner further past Freeport McMoRan, with the company being en route to becoming the largest producer of gold and copper in the United States by market capitalization.

If this takeover deal is successful, Newcrest shareholders will obtain 0.4 Newmont shares for every share held, with the implied value being AUD 29.27 per share. The share value is significantly higher than the former exchange ratio of 0.38, which was rejected by the Newcrest board in February this year.

The company’s shares reported a gain on Monday, and they were up by 1.5% at AUD 28.68. the offer provided on this deal is a 30.4% premium to the stock’s price in February before Newmont made its bid public.

Through this deal, Newmont will allow Newcrest to make a payment for a franked special dividend of a maximum of $1.10 per share to implement the deal. This deal will return tax credits to shareholders in Australia.

This merger deal will become the third-largest deal that has involved a company in Australia. It is also the third-largest deal globally that has been announced this year. The Chairman of Newcrest, Peter Tomsett, noted that the transaction would bring together the two largest gold producers globally and deliver immense value to the shareholders at Newcrest.

“This transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline,” said Newcrest’s Chairman, Peter Tomsett.

Deal to increase production capacity

Newmont has said that it will have around 8 million ounces worth of total combined annual gold production after the deal has been closed. Over 5 million gold ounces will be produced from long-life and low-cost mines.

Newmont is a miner based in Denver. The company is planning to have an annual copper production of around 350 million pounds from Australia and Canada. The shareholders at Newcrest will also have an opportunity to purchase Newmont shares listed at the New York Stock Exchange or those listed at the Australian CHESS Depository Instruments (CDIs) as payment.

Newcrest has also said that it recommends that shareholders vote in favor of this deal at a meeting that will be held in September or October. The deal will require approval from the Australian Foreign Investment Review Board alongside Newmont shareholders. These parties have to support the deal if the process is to be finalized in Q4 2023.