US-based Newmont has signed a binding scheme implementation deed (SID) with its rival gold mining company Newcrest Mining to acquire the latter in a deal that implies an enterprise value of A$28.8bn ($19.26bn) to Newcrest.
The deal represents an equity value of A$26.2bn ($17.52bn) to the Australia-based gold mining company.
As per the terms of the SID, shareholders of Newcrest Mining will exchange each of their shares in the company for 0.4 shares of Newmont.
Besides, Newcrest Mining will be allowed to pay a franked special dividend of up to $1.1 per share.
On completing the implementation, Newcrest Mining’s shareholders will hold a 31% stake in the combined company.
According to the Australian miner, the consideration represents a premium of 30.4% to its closing price of A$22.45 ($15.01) per share on 3 February 2023.
Newcrest Mining chairman Peter Tomsett said: “This transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding 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.”
Last month, Newcrest Mining received a sweetened bid of A$32.87 (21.98) per share from Newmont following the former’s rejection of a $16.9bn takeover offer from the US-based firm in February 2023.
The combined company is anticipated to bring annual pre-tax synergies of $500m within the first 24 months from the closing of the deal.
Newmont president and CEO Tom Palmer said: “The combination of Newmont and Newcrest represents an exceptional value proposition for shareholders and other stakeholders. It creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favourable mining jurisdictions.
“Following a robust due diligence process, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets.”
The transaction, which is subject to customary conditions, shareholder approvals from both companies and regulatory approvals, is anticipated to be complete in Q4 2023.
