World’s Top Gold Miner Newmont Offers $17 Billion for Newcrest
(Bloomberg) — Newmont Corp. is offering $17 billion to acquire Australia’s Newcrest Mining Ltd. and create a global precious metal behemoth in the largest takeover deal globally this year.
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The takeover, if completed, would also be one of the biggest in Australian history, according to data compiled by Bloomberg. Newcrest jumped as much as 14% in Sydney, the most since 2008.
The proposed deal comes as gold prices have experienced a sustained period of strength since 2020, and have rallied about 15% since early November. It would also increase Newmont’s footprint in copper, which is becoming more sought after due to its use in renewable energy and electric vehicles as economies de-carbonize.
Newmont has been working on its pursuit of Newcrest for a few months before making initial bids and is seeking a friendly deal, said a person with knowledge of the transaction who didn’t want to be named because the details aren’t public.
The bid for Newcrest could trigger rival producers like Barrick Gold Corp. to consider the merits of a counter move amid consolidation in the precious metal sector, the person said. It’s less likely to attract the large diversified miners like BHP Group and Rio Tinto Group given they’re less interested in gold and focused on expanding in copper, where Newcrest has relatively smaller production.
Newmont confirmed it made the offer in a statement late on Sunday in Denver, where it’s headquartered, saying the deal “presents a powerful value proposition” to both businesses. The company didn’t immediately comment on when it started working on the deal. A Barrick Gold spokeswoman declined to comment on the matter.
Already one of the world’s biggest gold miners with a market value of nearly $40 billion, Newmont made an earlier lower bid for Newcrest that its board rejected. The US miner is effectively offering to buy back its old spin-off, as Newcrest was originally set up as its Australian subsidiary in the 1960s.
In 1990, Newmont Australia Limited acquired Australmin Holdings Ltd, subsequently merged with BHP Gold Limited and changed its name to Newcrest Mining Limited.
“The strong Australian dollar, gold prices and declining global reserves suggest more acquisitions are likely, particularly for businesses like Newcrest, which has significant copper exposure,” Bloomberg Intelligence industry analyst Mohsen Crofts said in a note on Monday.
Newcrest derives the majority of its revenue from gold, and the rest from silver and copper, with mines in Australia, Canada and Papua New Guinea. The company plans to ramp up the copper component to take advantage of the expected surge in demand, Sherry Duhe, acting chief executive officer, said in an interview in November.
Growing Appreciation of Copper
Under the proposed deal, shareholders would receive 0.38 Newmont shares for each Newcrest share held, equivalent to A$27.16 a share or a 21% premium to Friday’s close, the Melbourne-based miner said in a regulatory filing Monday. The board is considering the proposal, which is conditional on Newmont being granted exclusive due diligence, Newcrest said.
The approach comes in the middle of Newcrest’s search for a new chief executive officer following the resignation of Sandeep Biswas in December. Duhe former chief financial officer of oil and gas producer Woodside Energy Group Ltd., is acting CEO until a permanent replacement is found.
The Australian miner will be getting roughly a quarter of its revenue from copper over the next decade, and there’s a growing appreciation for long-term stable supply of the metal, RBC Capital Markets said in a note. Newcrest shareholders may see the offer as either opportunistic or an answer to management uncertainty, it said.
Newcrest shares closed up 9.3% at A$24.53 in Sydney. The Australian miner has engaged JP Morgan Chase & Co. and Gresham Advisory Partners Ltd. as its financial advisers and Herbert Smith Freehills as its legal adviser. Newmont shares fall 6.9% in US premarket.
Newmont said it was using BofA Securities, Centerview Partners LLC and Lazard Ltd. as financial advisers, and King & Wood Mallesons and White & Case LLP as legal advisers.
–With assistance from Harry Brumpton, Jeff Sutherland, Liz Ng and Thomas Biesheuvel.
(Updates with person familiar comment in fourth and fifth paragraph. An earlier version of this story corrected US miner to Australian miner in 12th paragraph.)
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