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Acquisition of Australian Gold Miner Newcrest to be 'Transformational,' Newmont Chief Says
May 15, 202314:05 EDT
 NEM+2.93%
Newmont's NEM proposed acquisition of Australian gold miner Newcrest Mining is expected to be a "transformational" deal that will combine two of the industry's leading gold producers, Newmont Chief Executive Tom Palmer said Monday.
Newmont said late Sunday it will acquire Newcrest via an Australian court-approved scheme of arrangement in a deal that gives the latter an enterprise valuation of 28.8 billion Australian dollars ($19.3 billion). Newcrest shareholders will receive 0.400 Newmont share for each unit held, higher than a previous 0.380 exchange ratio that Newcrest's board rejected in February.
Newcrest will pay to its shareholders a franked special dividend of up to $1.10 per share, conditional on the deal becoming effective. Upon closing, Newmont and Newcrest shareholders will own about 69% and 31% of the merged entity, respectively.
The deal will also "set the standard for safe, profitable and responsible" gold and copper mining, Palmer said Monday on a call with analysts, according to a Capital IQ transcript. "I can confirm that following this acquisition, we remain firmly committed to our industry-leading dividend framework." Newmont shares were up 3% in Monday afternoon trade.
Separately, Newcrest said Monday its board unanimously recommends that its shareholders vote for the deal in the absence of a superior proposal. "This transaction will combine two of the world's leading gold producers, bringing forward significant value to Newcrest shareholders," Newcrest Chairman Peter Tomsett said in a statement. The deal includes certain circumstances in which a $174 million break fee would be payable to Newmont, or a $375 million reverse fee payable to Newcrest.
Newmont said it expects roughly 8 million ounces of combined annual gold production upon closing, as well as total annual copper production of about 350 million pounds from Australia and Canada.
Newmont said the deal is "highly accretive" to its shareholders. The company expects to achieve $500 million of total annual pretax synergies within the first 24 months following closing. It plans to boost cash flow by at least $2 billion in the first two years following closing through portfolio optimization, according to a statement.
Gregory Boyce will continue as chair of Newmont's board, which will select two directors from Newcrest. Palmer will lead the combined company. The deal is subject to shareholder and regulatory approvals.
Newcrest said it expects its shareholders to vote on the proposed deal at a meeting in September or October, with closing expected by the end of 2023. |
