Newmont Corp. has made a $17 billion offer to buy Australia’s Newcrest Mining Ltd., strengthening the US mining powerhouse’s position in copper and gold.
According to Bloomberg data, if finalized, the takeover would be the largest in the world this year and one of the largest in Australian history. In Sydney, Newcrest increased by up to 14%, the most since 2008.
Newmont Makes Takeover Bid For Australian Rival
The potential agreement comes as gold prices have been steadily rising since 2020, with a 15% increase since early November. It would also enhance Newmont’s footprint in copper, which is becoming increasingly valuable as economies decarbonize due to its use in renewable energy and electric vehicles.
In a filing in response to media speculation over the weekend, the Australian gold miner stated that it was evaluating the all-share proposal. According to a person acquainted with Newcrest’s deliberations, the initial indication from shareholders is that they desire a higher price.
“A good litmus test for a reasonably-priced deal is one where both seller and buyer feel somewhat aggrieved by selling out too low or by paying too much,”said Simon Mawhinney, a chief investment officer of Allan Gray, Newcrest’s largest shareholder with a 7.36% stake.
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Newcrest To Approve Proposal
The combination provided “a compelling value proposition,” according to Newmont, which is already the world’s largest gold producer by market capitalization and ounces produced.
Newcrest’s operations include the world-class Cadia asset in Australia, an expanding foothold in North America and Papua New Guinea, and growth potential in copper, which is highly valued as a critical component of the energy shift. In December, BHP (BBL) Group made a $6.4 billion bid for Oz (OZMLF) Minerals Minerals, an Australian copper miner.
The Newmont proposal is made through an agreed plan of arrangement, which must be approved by the Newcrest board and is subject to due diligence, multiple regulatory approvals, and a shareholder vote that could take months.
If investors do not support the purchase, the board will be under pressure to increase Newcrest’s value, maybe by separating assets such as Havieron and Telfer in Australia or Lihir in Papua New Guinea, according to Barrenjoey analyst Dan Morgan.
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