The world’s largest gold producer, the American corporation Newmont, has made proposal on the purchase of 100% of the shares of the Australian Newcrest Mining. Newmont is ready to pay $16.9 billion for the largest Australian gold miner, that is, with a premium of 21% to the value of the Australian company’s shares at the close of trading on the eve of the offer. Under the terms of Newmont’s offer, the merger will occur at a ratio of Newmont and Newcrest shares of 0.38 to 1. As a result of the merger, the newly formed company will be 70% owned by Newmont and 30% by Newcrest.
The Newmont gold mining company was founded in 1921 in Colorado. It owns mines in several US states, as well as in Canada, Latin America, Australia, Africa and mines not only gold, but also silver, zinc, lead, and copper. The capitalization of the company reaches almost $40 billion.
Newcrest was created in 1966 as a division of Newmont in Australia and originally had a different name. It became a separate company in 1980, and received the name Newcrest in 1990, when it acquired the Australian holding Australmin and a majority stake in BHP Gold Mines. Capitalization of Newcrest now stands at $15 billion. The company mines in Australia, Canada and Papua New Guinea.
The Australian manufacturer confirmed receipt of the proposal and noted that they are considering it. However, as reported Reuters citing knowledgeable sources, not all Newcrest shareholders are happy with the amount of the offer. Some analysts interviewed by the agency also believe that the offer price should be raised if Newmont is to complete the deal successfully. In particular, analysts believe that the premium to the value of shares should not be 21%, but 30%. The proposed deal is yet to be approved by the shareholders of both companies. Meanwhile, after news of the potential merger broke, Newmont’s stock fell nearly 5%, Newcrest’s stock rose more than 9%.
