Newmont Raises Bid for Australia’s Newcrest to $19.5 Billion
Takeover would be the largest-ever M&A deal in the gold-mining industry if successful
ADELAIDE, Australia— Newmont Corp. NEM -1.84% raised its takeover offer for Newcrest Mining Ltd. NCMGY -1.11% to around $19.5 billion, as it aims to seal what would be 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 at a time 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 own 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.
A spokesman for Newmont, which is based in Colorado and is the world’s top gold producer, declined to immediately comment.
Newmont’s pursuit of Newcrest illustrates how gold producers are seeking to do deals at a time when the industry is struggling to make large new 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 signaled 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 owning the rest.
An implied value of A$32.87 a share compares to Newcrest’s closing stock price of A$22.45 a share 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 for years found it difficult to add to reserves in low-risk countries, with many mines running low on gold that can be accessed easily and exploration campaigns turning up few big 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 expected to be in high demand as the world decarbonizes.
Newmont’s approach comes amid an upheaval at Newcrest, which in December said Sandeep Biswas would leave the company after eight years as chief executive. Newcrest named Chief Financial Officer Sherry Duhe as interim CEO while searching for Mr. Biswas’s successor.