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Wednesday, Jun 12, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Newmont boosts takeover bid for Newcrest to USD$19.5B

Newmont’s presence in British Columbia could be bolstered with the acquisition of Newcrest’s Red Chris mine

Newmont boosts takeover bid for Newcrest to $19.5 billion
Image via Newcrest Canada.

In a bid to strengthen its position as the world’s largest gold producer, Newmont Mining (TSX: NGT) (NYSE: NEM) has increased its all-stock takeover offer for Newcrest Mining (TSX: NCM) (ASX: NCM) (PNGX: NCM) to US$19.5 billion.

If the deal is finalized, Newmont’s presence in British Columbia will be bolstered with the acquisition of Newcrest’s Red Chris and Brucejack gold mines, which are located 1,700 kilometers and 950 kilometers north of Vancouver respectively.

“We are entering a new era in which mining companies must hold themselves to a higher standard of sustainability and long-term value creation,” Newmont chief executive Tom Palmer said in a press release.

“Together as the clear gold-mining leader, we would be well-positioned to generate strong, stable and lasting returns.”

The revised offer proposes that Newcrest shareholders will receive 0.4 Newmont shares for each Newcrest share they possess, representing an increase from the previous offer of 0.38. The earlier offer was unanimously rejected by Newcrest’s board in February.

Newcrest also has the option to pay a franked special dividend of up to USD$1.10 per share during the scheme of arrangement’s implementation. As a result, the Revised Proposal’s total value to Newcrest shareholders is A$32.87 per share.

After Newcrest’s announcement mid-February, Newcrest and Newmont entered into a non-disclosure agreement. Subsequently, Newcrest granted Newmont non-exclusive access to limited non-public information. The purpose of providing access was to allow Newmont to determine if they could submit an improved proposal that accurately reflected Newcrest’s value.

When the franked special dividend is combined with the implied consideration that Newcrest shareholders would receive from Newmont under the revised proposal, it results in a 16 per cent increase compared to Newmont’s initial proposal.

The revised proposal also offers several benefits to Newcrest shareholders, including an implied share price of A$32.87 per share, an implied equity value of A$29.4 billion (USD$19.5 billion), and an enterprise value of A$32.0 billion ($24 billion USD).

Read more: Calibre Mining reports record gold production in Q1 2023

Read more: Calibre Mining well-positioned to continue organic growth through gold grade increases: Cormark Securities

Newmont sweetens the deal per share to 0.4 Newmont shares

Additionally, Newcrest shareholders would own 31.1 per cent of the combined group after the proposal’s implementation, and the proposal includes a 46.4 per cent premium to Newcrest’s undisturbed closing price of A$22.45 per share on Feb. 3, 2023, as well as a 41.2 per cent premium to the undisturbed 30-day volume-weighted average price (VWAP) of A$22.22 per share on Feb. 3, 2023.

Newmont has stated that the revised proposal is its best and final price unless a competing proposal emerges.

After looking over the revised proposal Newcrest has agreed to give Newmont the opportunity to conduct its confirmatory due diligence and introduce a binding proposal. The due diligence should be finished in four weeks. Newcrest will also take this time to do due diligence on Newmont during this time.

The revised proposal is contingent upon meeting several conditions. A binding scheme implementation agreement must be established and will be subject to various conditions, including obtaining regulatory approvals and gaining Newcrest shareholder approval for the arrangement. Additionally, Newmont shareholders must approve for the issuance of Newmont shares as compensation.

Furthermore, the Newcrest board must unanimously recommend that shareholders vote in favour of the proposal, provided there is no superior proposal, and after independent expert determines that it’s in the best interests of Newcrest shareholders.

Newmont has requested exclusivity during the due diligence period as a condition of the proposal, and Newcrest intends to give it to them.

Newmont shares dipped $1.16 and are trading at $67.86 on the Toronto Stock Exchange.

Newcrest shares rose 6.4 per cent and are presently trading at $26.83 on the Toronto Stock Exchange.


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