Australia’s major gold producer Newcrest Mining [ASX:NCM] and US gold mining company Newmont have finally completed their ongoing acquisition deal, with Newmont now taking over Newcrest in a transaction worth around $30 billion, including debt.
This transaction can be described as the biggest-ever gold merger in gold mining history and has bumped up shares for both miners.
The dance had begun at the beginning of the year when Newcrest’s board rejected Newmont’s initial offer which had represented a 22% premium to its share price.
By midday on Monday, NCM shares were trading for $28.61 each.
NCM’s share price has risen 39% year-to-date, and it’s up by nearly 10% in its sector and 14% compared with the wider market:
Source: TradingView
Newcrest agrees to massive merger
Newmont’s board has given the nod to proceed with the transferal of 100% of its shares to Newcrest in an Australian scheme of arrangement. Furthermore, it believes shareholders should also vote in favour of the offer provided no superior proposal comes along.
Under the transaction terms, Newcrest shareholders will be offered 0.40 Newmont shares for every Newcrest share they might hold.
The scheme consideration represents a 30.4% premium to Newcrest’s closing price of $22.45 per share on 3 February and a 39.1% premium to its 30-day volume weighted average price.
Newcrest will be permitted to pay out a franked special dividend before the takeover is completed. This represents an implied Newcrest share price of $29.27 an implied equity value of $26.2 billion and an enterprise value of $28.8 billion.
Once all is done and dusted, Newcrest shareholders will hold a 31% ownership of the combined gold mining group.
If the deal receives approval from Newcrest shareholders, and so long as the usual transaction-linked conditions are satisfied, the scheme is expected to conclude by the end of 2023.
The scheme also includes certain circumstances in which a break fee of US$174 million would be payable to Newmont or a reverse break fee of US$375 million to Newcrest.
Newcrest believes this transaction will establish a new global leader in gold production by combining two of the world’s largest producers, with significant and growing exposure to copper.
Newcrest chair Peter Tomsett said:
‘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.’
Newmont has agreed to establish a foreign-exempt listing on the ASX to allow Newcrest shareholders to trade Newmont shares via CHESS Depositary Interests (CDIs).
Newcrest shareholders will be able to choose to receive the Scheme Consideration in NYSE-listed Newmont shares or ASX-listed CDIs.
Copper mining stocks 2023
While big moves are happening in the gold industry right now, another metal you’d be wise not to let slip under your radar is copper.
There are certain copper stocks worth watching in 2023. If you subscribe to Fat Tail Commodities, you could instantly download James Cooper’s most recent insider report on the subject — all for free.
James will give you instant tips on three of the latest top stock picks for the copper industry. He’ll also talk about the copper supply crisis and how you can position yourself to take advantage of incoming changes to the industry.
Interested in jumping at a potentially lucrative opportunity reserved for the shrewdest of investors?
Find out more and click here today.
Regards,
Fat Tail Commodities
Comments