Australian gold miner Newcrest Mining Ltd has announced its support for Newmont Corporation's A$26.2 billion ($17.8 billion) takeover offer, marking one of the largest buyouts in 2023. The deal, which still needs regulatory approval and support from both companies' shareholders, would significantly boost Newmont's gold output, propelling it ahead of rivals Barrick Gold Corp and Freeport McMoRan to become the largest U.S. gold and copper producer by market capitalization.
Under the agreement, Newcrest shareholders will receive 0.400 Newmont share for each share held, with an implied value of A$29.27 per share, which is higher than the previous exchange ratio of 0.380 that Newcrest's board had rejected in February. This offer represents a 30.4% premium to the stock's price in February before the Newmont bid became public.
Newmont is also allowing Newcrest to pay a franked special dividend of up to $1.10 per share on the implementation of the deal, which returns tax credits to Australian shareholders. The merger is set to be the third-largest deal ever involving an Australian company and the third-largest globally in 2023, according to data from Refinitiv and Reuters' calculations.
"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 Chairman Peter Tomsett.
Once the deal is completed, Newmont will have approximately 8 million ounces of total combined annual gold production, with more than 5 million gold ounces from 10 long-life and low-cost mines. The Denver-based miner added that it would have combined annual copper production of approximately 350 million pounds from Australia and Canada.
Newcrest shareholders will be able to choose to receive New York Stock Exchange-listed Newmont shares or Australian-listed CHESS Depository Instruments (CDIs) as payment. Newcrest has recommended that its shareholders vote in favor of the deal at a meeting expected to be held in September or October.
The deal is subject to Australia's Foreign Investment Review Board (FIRB) approval, as well as regulatory requirements from both companies' shareholders. The companies said the deal was due to be finalized in the fourth quarter of 2023.
Overall, this acquisition will be a game-changing deal for Newmont's gold and copper production, boosting its global standing and market capitalization. The merged company will have a strong growth pipeline, enabling it to deliver significant value to shareholders.
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