Newmont Sweeten Bid for Newcrest

Newmont Corp. raised its takeover offer for Newcrest Mining Ltd. to around $19.5 billion, aiming to seal the largest-ever M&A deal in the gold-mining industry. Newmont’s decision to improve its all-stock offer for Newcrest, Australia’s largest listed gold miner, comes when gold prices are approaching a record high amid stress in the global banking system and heightened worries over the economic outlook. Newmont is offering 0.400 of its shares for each Newcrest share, Newcrest said in a regulatory filing on Tuesday. In addition, Newcrest said it is permitted to pay a special dividend of up to $1.10 a share around the time any deal completes.

Newcrest, which owns mines in Australia, Canada and Papua New Guinea, said this represented a 16% increase to an initial bid from Newmont that it had rejected. After assessing the latest proposal, Newcrest said it would open its books to Newmont to firm up a binding offer.

Newmont’s pursuit of Newcrest illustrates how gold producers are seeking to do deals at a time when the industry is struggling to make significant discoveries of the precious metal. In 2019, Newmont acquired Canadian gold producer Goldcorp Inc. in a transaction valued at $10 billion. The same year, Newmont and rival Barrick Gold Corp. formed a joint venture in Nevada to cut costs after an earlier offer from Barrick to buy Newmont was rejected.

Newmont previously said its business was complementary to Newcrest’s and that a combined entity could “set the standard for sustainable and responsible gold mining.” Newmont has indicated the latest bid is its best and final price unless a rival suitor emerges, Newcrest said. Barrick Gold previously signalled it wasn’t interested in making a competing bid for the Australian gold company. The revised offer represents an equity value of 29.4 billion Australian dollars ($19.5 billion) and an enterprise value of A$32.0 billion, Newcrest said. A deal would result in Newcrest shareholders owning about 31% of the combined company, with Newmont investors holding the rest.

An actual value of A$32.87 a share compares to Newcrest’s closing stock price of A$22.45 on Feb. 3, before Newmont’s interest became known. Newcrest’s stock rose by 6.2% to A$30.02 a share early in Sydney on Tuesday. Gold miners have found it challenging to add to reserves in low-risk countries for years, with many mines running low on gold that can be accessed quickly and exploration campaigns turning up few significant deposits. Of the 341 major deposits discovered between 1990 and 2021, only 28 were found in the past decade and contained only 6% of the gold discovered since 1990, according to S&P Global Market Intelligence.

Newcrest’s suite of gold-mining operations and growth projects would cement Newmont’s position as the world’s largest gold miner. Newcrest’s assets can run for 22 years before becoming depleted, well above most of its listed rivals, according to analysts at Barrenjoey, an Australian investment bank. They would also boost Newmont’s exposure to copper, an industrial metal in high demand as the world decarbonizes.

Newmont’s approach comes amid an upheaval at Newcrest, which said Sandeep Biswas would leave the company after eight years as chief executive in December. Newcrest named Chief Financial Officer Sherry Duhe interim CEO while searching for Mr Biswas’s successor.