Gold mining company Newcrest Mining (ASX:NCM) has received a revised non-binding indicative proposal from American gold mining company Newmont (NYSE:NEM) to acquire 100% of the issued shares in Newcrest by way of a scheme of arrangement.
Newmont has now proposed its best and final offer for Australian gold giant Newcrest at $29.4 billion to close a deal that would extend the suitor’s position as the world’s largest gold producer.
Under the revised proposal, Newcrest shareholders will be entitled to receive 0.400 Newmont shares for each Newcrest share held.
Additionally, the revised proposal permits Newcrest to pay a franked special dividend of up to US$1.10 per share on or around the implementation of the scheme of arrangement. In aggregate, the revised proposal represents an implied value of $32.87 per share to Newcrest shareholders.
Following Newcrest’s announcement on 16 February 2023, both parties signed a non-disclosure and standstill agreement. Newcrest subsequently provided Newmont with access to limited, non-public information on a non-exclusive basis to determine if Newmont could provide an improved proposal that appropriately reflected the value of Newcrest.
This implied consideration which will be received by Newcrest shareholders under the revised proposal from Newmont, when aggregated with the franked special dividend, represents an increase of 16% to Newmont’s initial proposal.
It also represents an implied Newcrest share price of $32.87 per share; an implied equity value of $29.4 billion and an enterprise value of $32 billion for Newcrest; 31.1% ownership of the combined group by Newcrest shareholders on implementation; a 46.4% premium to Newcrest’s undistributed closing price of $22.45 per share on 3 February 2023; and a 41.2% premium to Newcrest’s undistributed 30-day volume weighted average price (VWAP) of $22.22 per share on 3 February 2023.
Newcrest reports Newmont has indicated that the revised proposal represents its best and final price in the absence of a competing proposal.
After assessing the proposal, Newcrest says it has agreed to grant Newmont the opportunity to conduct confirmatory due diligence to enable it to put forward a binding proposal.
Due diligence is expected to be completed within 4 weeks, and Newcrest notes it will also undertake confirmatory due diligence on Newmont during this period.
The revised proposal is subject to several conditions including satisfactory completion of confirmatory due diligence by both parties, entry into a binding scheme implementation agreement that will be subject to a range of conditions including obtaining regulatory approvals, shareholder approval, and the unanimous recommendation from Newcrest that shareholders vote in favour of the proposal.
Newmont has requested exclusivity during the due diligence period as a condition of the proposal, and Newcrest notes it intends to grant exclusivity.
Newcrest Mining is an Australian gold mining company focused on its portfolio of projects across Australia, Canada, and Papua New Guinea.In Australia the company currently holds the Cadia Gold-Copper Project in New South Wales, as well as the Havieron Joint Venture with Greatland Gold (LSE:GGP), and the Telfer Gold-Copper Project in Western Australia.
Images: Newcrest Mining Ltd
