Newmont Corp. has agreed to buy Australia’s Newcrest Mining in a deal worth about A$28.8 billion ($19.2 billion), including debt, cementing the US miner’s position as the world’s largest gold producer.
Newcrest holders will receive 0.4 Newmont shares for every share they hold, giving them 31% ownership of the combined group, the companies said Monday. They will also receive a special tax-free dividend of up to $1.10 per share.
The deal is the largest merger and acquisition ever for a gold mining company, surpassing Newmont’s $12.3 billion purchase of Goldcorp in 2019, according to Bloomberg, which was viewed by Al Arabiya.net.
Newmont’s proposal comes as bullion trading is close to a record high. The Denver, US-based company will boost its copper resources, a mineral seen as vital to helping the world transition away from fossil fuels.
“We are positioned to deliver an estimated $500 million in annual cost synergies and an estimated $2 billion in additional cash flow from portfolio optimization opportunities,” Newmont CEO Tom Palmer said in a statement. This deal also increases the company’s annual production of copper, which is a vital resource for renewable energy economies.
The Melbourne-based miner earlier agreed to extend the “due examination” period for the deal to May 18, after the previous deadline had expired.
Newmont approached its Australian rival for the first time in February with a non-binding offer of $17 billion, which was rejected by Newcrest’s board. It replaced it with a new offer in April that raised the valuation to $19.5 billion, describing it as the best and last offer. Sherry Doh, CEO of Newcrest, said the board is prepared to recommend the proposal to its shareholders, subject to successful due diligence.
Gold miners around the world face the prospect of stagnant production, difficulty in extracting reserves, and rising input costs. These industry challenges are seen as a catalyst for more mergers and acquisitions, as companies seek to scale up to boost production and improve efficiencies through economies of scale.
Aside from Newcrest’s five gold mines across three continents, an additional attraction for Newmont is that about a quarter of the Australian company’s revenue comes from copper.