Newmont Inks $20 Billion Newcrest Deal to Create Gold Giant

(Bloomberg) — Newmont Corp. agreed to buy Newcrest Mining Ltd. in a deal worth about A$28.8 billion ($19.2 billion) including debt, consolidating the US miner’s status as the world’s biggest gold producer.

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Newcrest holders will get 0.4 shares in Newmont for every share they own, giving them 31% ownership of the combined group, the companies said Monday, confirming a Bloomberg News report Sunday. They will also get a tax-free special dividend before closing of as much as $1.10 per share.

The transaction is the biggest ever M&A deal for a gold miner, surpassing Newmont’s $12.3 billion purchase of Goldcorp Inc. in 2019, according to Bloomberg calculations. It may mark the apogee of a furious five-year consolidation among the world’s largest miners that began with Barrick Gold Corp.’s $18 billion pursuit of Randgold Resources Ltd. and includes a $5.2 billion takeover of Yamana Gold Inc. that was completed in March.

Newmont’s proposal comes as bullion trades near an all-time record and will boost the Denver-based company’s resources of copper, a metal seen as vital to help the world transition away from fossil fuels.

“We are positioned to deliver an estimated $500 million in annual synergies and an estimated $2 billion in incremental cash flow from portfolio optimization opportunities,” Newmont Chief Executive Officer Tom Palmer said in a statement. “This transaction also increases Newmont’s annual copper production — a metal vital for the new energy economy.”

The deal gives Newcrest an implied share price of A$29.27 per share, the company said. The Melbourne-based miner had earlier agreed to extend Newmont’s due-diligence rights to May 18 after an earlier deadline lapsed.

Newmont first approached its Australian rival in February with a $17 billion non-binding bid that was rejected by Newcrest’s board. The US company sweetened that in April to $19.5 billion, and described it as the best and final offer. Newcrest Chief Executive Officer Sherry Duhe said the board was prepared to recommend the proposal to its shareholders, subject to successful due diligence.

Gold miners worldwide are facing the prospect of stagnating production, harder-to-mine deposits and rising input costs. Such industry challenges are seen as a catalyst for more mergers and acquisitions, as companies seek to increase size to boost production and improve efficiencies through economies of scale.

It’s not just Newcrest’s five gold mines across three continents that are attracting Newmont, as the Australian company generates around a quarter of its revenue from copper. Newmont, in turn, is facing a decade-long gold rut and has said it wants more of the energy-transition metal in its portfolio.

–With assistance from Jason Scott.

(Updates with Newmont comment in fifth paragraph)