Newmont Corp Extending Lead as World’s Largest Gold Producer

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Ltd. Newmont has made a “best and final offer” of A$29.4 billion ($19.5 billion) to acquire Newcrest, making Newmont the world’s biggest gold producer, surpassing its closest competitor, Barrick Gold Corp.

The amended offer would increase the exchange ratio from the 0.380 Newcrest’s board unanimously rejected in February to 0.400 Newmont shares for every share held, with an implied value of A$32.87 per share. 

This updated offer is around a 46% premium to the share price of Newcrest on February 3—the day before Newmont made its initial bid—and is 16% higher than the previous offer made by Newmont.

Following the improved all-share offer that has gained some support from shareholders, Newcrest has granted Newmont access to its books. If the acquisition is approved, Newmont’s gold output will increase to almost twice that of Barrick Gold Corp., its closest competitor.

In addition to its world-class Cadia asset in Australia, Newcrest’s operations include a growing presence in North America and Papua New Guinea and growth potential in copper, which is highly coveted as essential to the global energy shift. 

The merger is anticipated to be the third-largest global transaction in 2023 and the third-largest deal ever involving an Australian company.

Some investors see the latest bid as a better balance. Newcrest’s top shareholder Allan Gray Australia’s Chief Investment Officer, Simon Mawhinney, states, “I think this offer strikes a better balance. We are positively disposed to the Newcrest-Newmont merger and would intend to remain a shareholder of the combined entity were a transaction to proceed.”

After a four-week due diligence period, Newmont is seeking unanimous board permission to proceed with the binding offer. In addition, it is providing a franked special dividend of up to $1.10 per share.

But in pre-market trade, Newmont’s U.S.-listed shares were down roughly 1.72%, indicating some doubt about whether the deal would go through. Given the short-term operational challenges, interim CEO, and apparent lack of market appreciation for the project’s long-term potential, some investors consider the transaction opportunistic.

Since Barrick and miner Sibanye Stillwater Ltd. have stated they are not interested in bidding for Newcrest, it is unlikely that any other significant gold mining companies will make a counteroffer.

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