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Newmont stock falls on acquisitions
By William Spain, CBS.MarketWatch.com
Last Update: 4:54 PM ET Nov. 14, 2001
DENVER (CBS.MW) -- A pit opened under shares of Newmont Mining after the company announced Wednesday it would become the world's largest gold producer via acquisitions of a pair of foreign competitors.
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In a transaction valued at a total of about $4.4 billion, Newmont announced plans to buy both Australia's Normandy Mining (AU:NDY: news, chart, profile) and Canada's Franco-Nevada Mining (CA:FN: news, chart, profile).
Newmont (NEM: news, chart, profile) said it will exchange 0.0385 of a share for each Normandy share outstanding, as well as the U.S. dollar equivalent of 2.6 cents a share in cash. The proposal trumps a bid made by AngloGold Ltd. (AU: news, chart, profile) in early September.
For Franco-Nevada, Newmont is offering 0.8 shares for each share outstanding.
Shares of Newmont lost $1.95, or just under 9 percent, to close at $20.30, reflecting investors' fears about dilution.
***** (gotta love this part ) *****
Pending completion of the deals, the combined entity will be the global leader in gold reserves, production, leverage, trading liquidity and earnings before interest, taxes, depreciation and amortization.
In the words of Newmont CEO Wayne Murdy, the company will "become one of the best-capitalized companies in the gold mining industry, with enhanced strength and flexibility to continue to explore, develop new projects and make strategic investments as opportunities arise."
The company will boost its combined cash position to over $700 million, he added, which will slice its debt to book capitalization by more than half, to just 18 percent.
Newmont also expects to benefit from $70 million to $80 million in annual "after-tax synergies" after a year, a range that will subsequently increase to $80 million to $90 million. And the deal is expected to be immediately accretive to earnings, the company said.
William Spain is a reporter for CBS.MarketWatch.com in Chicago. |
