Australian gold major Newcrest Mining has inked a binding scheme implementation deed with US major Newmont, with the company’s board unanimously recommending that shareholders vote in favour of the proposed takeover offer.
Under the offer, Newcrest shareholders would receive 0.4 Newmont shares for each Newcrest share held, with Newcrest additionally permitted to pay a fully franked special pre-completion dividend of up to $1.10 a share.
The offer values Newcrest shares at A$29.27 each and implies an equity value of A$26.2-billion and an enterprise value of A$28.8-billion to Newcrest.
The offer represents a 30.4% premium to Newcrest’s undisturbed closing price of A$22.45 a share on February 3, and a 39.1% premium to the company’s undisturbed 30-day volume weighted average share price.
“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 chairperson Peter Tomsett.
“In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefitting from a material and growing exposure to copper and a market leading position in safety and sustainability. The Newcrest board is unanimously recommending the proposal. We are very proud of the entire Newcrest team for building a world class metals business, which will form a key part of the combined group. We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future.”
Following the transaction, Newcrest shareholders will hold a 31% ownership of the combined group.
“The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and other stakeholders. It creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favorable mining jurisdictions,” said Newmont president and CEO Tom Palmer.
“Following a robust due diligence process, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets. Leveraging our experience from the acquisition of Goldcorp four years ago, we are positioned to deliver an estimated $500-million in annual synergies and an estimated $2-billion in incremental cash flow from portfolio optimization opportunities, both part of our strategy to maximize value for shareholders and other stakeholders.”
“This transaction also increases Newmont’s annual copper production, a metal vital for the new energy economy, and adds nearly 50-billion pounds of copper reserves and resources from Newcrest to our robust and balanced portfolio. We intend to quickly realize these opportunities to create superior value for our shareholders, workforce, host communities and governments,” said Palmer.
The transaction is subject to a number of conditions, including Australian and Canadian regulatory approvals, an independent expert backing the offer, and shareholder approvals from both sides.
If the transaction meets all of the conditions precedent, the scheme is expected to be implemented by the end of 2023.