Australian gold giant Newcrest Mining (ASX:NCM) has struck a binding scheme implementation deed (SID) for a $28.8 billion takeover by US-based Newmont Corporation (NYSE:NEM).
Under the terms of the deal, Newcrest shareholders will be entitled to receive 0.400 Newmont shares for each Newcrest share held. Additionally, Newcrest will be permitted to pay a franked special dividend of up to US$1.10 per share on or around the implementation of the scheme of arrangement.
Newcrest says the takeover represents an implied Newcrest share price of $29.27 per share, an implied equity value of $26.2 billion and an enterprise value for Newcrest of $28.8 billion.
This valuation of Newcrest marks a 30.4% premium to the gold miner’s closing share price of $22.45 on 3 February 2023 and a 39.1% premium to Newcrest’s undisturbed 30-day volume weighted average price (VWAP) of $22.22 per share on 3 February 2023.
Upon the completion of the deal, Newcrest shareholders will own 31% of the combined group.
In addition to the ‘significant’ premium to Newcrest’s undisturbed share price in early February, the company says the transaction provides several benefits to Newcrest shareholders through exposure to the combined group.
Newcrest’s board is unanimously recommending shareholders vote in favour of the transaction in the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude the transaction is in the best interest of the company’s shareholders.
Commenting on the SID with Newmont, Newcrest Mining Chairman Peter Tomsett says: “This transaction will combine 2 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 benefiting from a material and growing exposure to copper and a market-leading position in safety and sustainability.
“The Newcrest board is unanimously recommending the proposal”
The Newcrest board is unanimously recommending the proposal. We are very proud of the entire Newcrest team for building a world-class metals business, which will form a key part of the combined group. We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future.”
Newcrest reports the transaction is subject to conditions including approval from the Australian Foreign Investment Review Board (FIRB), approvals required under the Hart Scott Rodino Act and clearance from the Canadian Competition Bureau, the Independent Consumer and Competition Commission of Papua New Guinea, and other competing approvals.
The Federal Court of Australia, the New York Stock Exchange (NYSE), and the Australian Securities Exchange (ASX) will also need to give the deal the green light.
Newcrest says the SID is subject to customary deal protections for both companies including no shop, no talk, no due diligence, and notification obligations. The company is also bound by other customary provisions, including a matching right in the event of a competing proposal.
Additionally, the SID includes certain circumstances in which a break fee of US$174 million will be payable to Newmont, or a reverse break fee of US$375 million will be payable to Newcrest.
Under the SID, both parties are permitted to pay certain ordinary dividends in the ordinary course. Newcrest is also permitted to pay certain quarterly dividends if the transaction is delayed beyond 1 December 2023. For Newcrest, any ordinary dividend declared will be additional to the special dividend.
Newcrest reports it will send a scheme booklet to its shareholders in due course that will include information relating to the transaction and the independent expert’s report. Newcrest has appointed Grant Samuel & Associates as its independent expert.
If the Newmont transaction is approved by Newcrest shareholders and other conditions precedent are satisfied or waived, the scheme is expected to be implemented by the end of 2023.
Newcrest reports Newmont has agreed to a foreign-exempt listing on the ASX to allow Newcrest shareholders to trade Newmont shares through CHESS Depositary Interests (CDIs) on the ASX. Newcrest shareholders will also be able to elect whether to receive the scheme consideration in NYSE-listed Newmont shares of ASX-listed CDIs.
Newcrest Mining is a Melbourne-based gold mining giant with operating mines in Australia, Canada, and Papua New Guinea. The company’s portfolio includes the Cadia, Havieron, and Telfer projects in Australia, as well as the Brucejack, and Red Chris projects in Canada and the Lihir, and Wafi-Golpu projects in Papua New Guinea.
Newmont Corporation is US-based ‘world-leading’ gold company and producer of copper, silver, zinc, and lead with a portfolio of assets across North and South America, Australia, and Africa.
Images: Newcrest Mining Ltd
