Newmont’s acquisition of Newcrest moves forward, creating an industry-leading gold producer

Newmont (NYSE: NEM), a prominent US gold company, has secured its acquisition of Newcrest (ASX:NCM), an Australian mining firm, following a three-month battle.

The deal, valued at $26.2b, involves Newmont acquiring 100% of the issued shares in Newcrest through a scheme of arrangement.

Shareholders of Newcrest will receive 0.400 Newmont shares for each Newcrest share held, translating to a value of $29.27 per Newcrest share or an equity value of $26.2b.

The Newcrest board has unanimously recommended that shareholders vote in favour of the Newmont takeover, with a meeting scheduled for September or October.

Upon completion, Newcrest shareholders will hold a 30.1% stake in the new combined entity, solidifying its position as an industry leader in gold production.

It is important to note that the acquisition also raises foreign ownership of Australian gold assets beyond the 50% threshold.

Newcrest chairman Peter Tomsett expressed confidence in the transaction, emphasising the significant value it brings to Newcrest shareholders by recognising the company’s growth potential.

The combined group is expected to set a new benchmark in gold production while benefitting from increased exposure to the copper market, as well as establishing a leading position in safety and sustainability.

As part of the arrangement, Newcrest has been granted permission to pay a franked special pre-completion dividend of US$1.10 per share to its shareholders.

Newmont chief executive Tom Palmer highlighted the creation of an industry-leading portfolio with a multi-decade gold and copper production profile, leveraging the company’s experience from the previous acquisition of Goldcorp.

Newcrest, initially a subsidiary of Newmont before being spun off in the 1960s, operates mines in Australia, Canada, and Papua New Guinea, including the notable Lihir mine, which ranks among the world’s largest gold mines.

Newmont’s previous takeover attempt in February, with a $24b offer, was rejected by the Newcrest board.

Subsequent negotiations and exclusive due diligence paved the way for the current agreement.