Newmont’s $19.6 Billion Bid for Newcrest Faces Regulatory and Shareholder Burdens

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On April 12, industry analysts highlighted potential obstacles that Newmont Corporation’s proposed acquisition of Newcrest Mining could face, such as obtaining the necessary approvals from shareholders and regulators and securing the full support of Newcrest’s board.

The offer, valued at A$29.4 billion ($19.6 billion), may require additional negotiations before acceptance. However, Newmont made a revised offer on April 11, improving its earlier bid. 

The updated proposal offers 0.400 of its shares for each share of Newcrest Mining and a franked special dividend of up to $1.10 per share. Newmont stated that this is their “best and final” offer and emphasised the need for unanimous board support to proceed with the acquisition.

“Importantly, board recommendation and (an) independent expert report remain key hurdles,” Morgan Stanley stock analyst Rahul Anand reported.

Newcrest’s board had previously rejected Newmont’s initial offer of 0.380 shares for each of its shares, which was unanimously turned down in February.

Newcrest Australian shareholders “will view a holding in MergeCo as a positive outcome from the deal as it provides access to a larger, more diversified asset base,” Jefferies, an American multinational independent investment bank and financial services firm, said in a report.

If Newmont Corporation’s proposed acquisition of Newcrest Mining is successful, it would be the third-largest deal ever involving an Australian company and the third-largest globally in 2023.

The gap between Newcrest’s share price and the implied offer price narrowed when Newmont shares resumed trade after a long weekend and fell by 2.3 per cent. As a result, the suggested offer price for Newcrest declined to A$29.99, highlighting the impact that external market factors can have on the deal’s progress.

It remains to be seen whether the remaining obstacles can be overcome and the acquisition can be completed.

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