(Bloomberg) — Newmont Corp has agreed to buy Newcrest Mining Ltd in a deal worth about A$28.8 billion ($19.2 billion) including debt, cementing the US miner’s position as the world’s largest gold producer.
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Newcrest holders will receive 0.4 shares in Newmont for every share they own, giving them 31% ownership of the combined group, the companies said Monday, confirming a Bloomberg News report Sunday. They will also receive a special, tax-free dividend before closing of up to $1.10 per share.
The deal is the largest ever merger and acquisition deal for a gold mine, surpassing Newmont’s $12.3 billion purchase of Goldcorp Inc. In 2019, according to Bloomberg calculations. It could mark the culmination of a furious five-year merger between the world’s two largest miners that began with Barrick Gold Corp’s $18 billion bid to buy Randgold Resources Ltd. It includes the $5.2 billion acquisition of Yamana Gold Inc. .
Newmont’s proposal comes as bullion trade is near an all-time record and would boost the Denver-based company’s resources of copper, a metal seen as vital to helping the world transition away from fossil fuels.
“We are positioned to deliver an estimated $500 million in annual synergies and an estimated $2 billion in additional cash flow from portfolio optimization opportunities,” Newmont CEO Tom Palmer said in a statement. “This transaction also increases Newmont’s annual copper production – a mineral vital to the new energy economy.”
The company said the deal gives Newcrest an implied share price of A$29.27 per share. The Melbourne-based miner earlier agreed to extend Newmont’s due diligence rights to May 18 after the previous deadline had expired.
Newmont first approached its Australian rival in February with a non-binding $17 billion offer that Newcrest’s board rejected. And the American company resolved that in April to $ 19.5 billion, describing it as the best and last offer. Sherry Doh, CEO of Newcrest, said the board is ready to recommend the proposal to its shareholders, subject to successful due diligence.
Gold miners around the world face the prospect of stagnant production, difficulty in extracting deposits, and rising costs of inputs. These industry challenges are seen as a catalyst for more mergers and acquisitions, as companies seek to scale up to boost production and improve efficiencies through economies of scale.
It’s not just Newcrest’s five gold mines across three continents that attract Newmont, with the Australian company generating about a quarter of its revenue from copper. Newmont, in turn, is facing a decade-long gold crisis and has said it wants more energy transition metal in its portfolio.
– With the help of Jason Scott.
(Updates with Newmont’s comment in fifth paragraph)
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