Newcrest Mining board gives ‘thumbs up’ to Newmont’s $28.8 billion takeover bid
Despite initial rejection of Newmont’s offer, Newcrest Mining has accepted the upgraded proposal, enabling its shareholders to gain 31% ownership in the combined entity.
Newmont, the world’s largest gold producer, is now on the path to becoming significantly bigger after the board of takeover target Newcrest Mining (ASX: NCM) unanimously agreed to recommend its merger bid to its shareholders.
Recent Newmont projections indicated the combined entity would potentially create annual production of 8Moz of gold and 155k tonnes of copper.
The merged company would also control world leading gold stocks.
Newcrest, the largest ASX-listed gold producer, recently reported proved and probable gold reserves of 62Moz which can be added to Newmont’s monumental gold reserves of 96.1 million attributable ounces.
It is also set to become a significant copper producer, with a number of future developments set to provide significant production upside in the coming decades, including the world-class Wafi-Golpu copper-gold project in Papua New Guinea.
Takeover timeline
After rejecting Newmont’s initial 6 February 2023, non-binding indicative offer, the Newcrest board today elected to accept its suitors’ significantly upgraded 11 April 2023 revised non-binding indicative proposal.
That upgrade, which led to today’s Binding Scheme Consideration agreement, carries an implied equity value of $26.2 billion and enterprise value for Newcrest of $28.8 billion.
It will also provide Newcrest’s shareholders with 31% ownership of the combined group.
According to Newcrest’s chairman, Peter Tomsett, the transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of the company growth pipeline.
“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 believe our shareholders and other stakeholders can look forward to an exciting and prosperous future,” he added.
Long road ahead
While Newmont has successfully overcome the Newcrest board approval hurdle, it still faces a number of obstacles and a lengthy wait for the deal to be finally put to bed.
The list of official approvals the takeover bid must now receive includes:
- approval by Australia’s Foreign Investment Review Board (FIRB);
- approvals required under the Hart Scott Rodino Act and clearances required from the Canadian Competition Bureau, the Independent Consumer and Competition Commission of Papua New Guinea and other competition approvals;
- Newcrest shareholder approval in respect of the scheme of arrangement;
- approval of the Federal Court of Australia;
- approval for quotation of the Scheme Consideration securities on NYSE (Newmont shares) and ASX (CDIs); and
- receipt of confirmation of an ATO class ruling.
According to Newcrest, this is likely to lead to the Scheme not being implemented until towards the end of 2023.