The board of Australia’s Newcrest Mining has unanimously backed an A$29 billion ($19 billion) takeover bid by its U.S. rival Newmont, paving the way for the world’s largest gold miner to strengthen its grip on the industry.
Subject to shareholder vote and regulatory approval, Newmont will acquire Newcrest – which it originally founded in the 1960s before spinning off through a merger with BHP – with an offer of 0.4 shares each in the Australian business.
The deal will strengthen Denver-based Newmont’s operations in Australia, Canada and Papua New Guinea and potentially create a knock-on effect across the industry as smaller mines owned by the combined company are decommissioned.
It is the latest example of consolidation within the world extraction industry as large companies look to buy promising operations to increase scale and exposure to critical minerals needed for the energy transition. Newmont’s move significantly increases its exposure to copper and follows BHP’s takeover of rival Oz Minerals, Rio Tinto’s acquisition of Turquoise Hill and Allkem’s merger with Livent to create a bigger lithium player. consistent.
Newmont approached first Newcrest in February with a totalitarian offer but it was rejected. It increased its offer in April to A$29.4 billion, which prompted Newcrest’s board to open its books.
The slightly lower value of the deal, which includes debt, reflects a decline in Newmont’s share price over the past two months, but still represents a more than 30% premium to where it was just before the initial offering was made.
The chief executive officer of US-listed Newmont Tom Palmer, an Australian originally from the mining town of Broken Hill, said the acquisition represents “exceptional value” for shareholders. “Build an industry-leading portfolio with a multi-decade profile of gold and copper production in the world’s most favorable mining jurisdictions,” he said.
Deal comes amid gold prices soaring to near record highs as banking sector issues, a dovish Federal Reserve stance and uncertainty around the US debt ceiling bolstered safe-haven status gold, ANZ bank said.
Rahul Anand, an analyst at Morgan Stanley, said in a statement: “We see the deal, if approved, will produce operational synergies around the project sequence and growth option, as well as the combined entity will increase its diversification of assets. operations in low-risk jurisdictions. “
Palmer said the due diligence identified $500 million of synergies the company expected to achieve within two years of the deal’s completion, as well as opportunities to improve cash flow by $2 billion over that time.
Newcrest will pay a final dividend to shareholders as part of the acquisition deal. The combined business will maintain a secondary listing on the Australian Stock Exchange.
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