Newmont Corp. has proposed a $17 billion offer to purchase Australia’s Newcrest Mining Ltd., in a deal which would solidify the US mining giant’s industry-leading positions in copper and gold.
According to data from Bloomberg, if completed, the deal would be the largest takeover globally this year, and among the biggest in the history of Australia. In early trading in Sydney, Newcrest surged 14%, the most it has risen since 2008.
Analysts note as the deal is being proposed, gold is in the midst of a 15% rally since November, following a sustained period of strength going back to 2020. The deal would also expand Newmont’s copper position. Copper has increased in value as its importance has grown in the fields of electric vehicle manufacture, and renewable energy, as those environmentally friendly sectors have seen surges of support from customers and governments.
On Sunday, Newmont released a statement confirming it had made the offer, and saying the deal “presents a powerful value proposition” to both businesses.
With a market value of almost $40 billion making it among the world’s biggest gold miners, Newmont had already made an earlier bid for Newcrest which was rejected by its board.
On Monday, Bloomberg Intelligence industry analyst Mohsen Crofts said in a note, “The strong Australian dollar, gold prices and declining global reserves suggest more acquisitions are likely, particularly for businesses like Newcrest, which has significant copper exposure.”
Newcrest, with mines in Australia, Canada, and Papua New Guinea, generates most of its revenue from mining gold, with the rest coming from silver and copper. In an interview in November, Sherry Duhe, acting chief executive officer, said the company would be ramping up its copper operations to take advantage of market conditions.
According to a regulatory filing submitted Monday, under the deal proposed by Newmont, current shareholders would receive 0.38 shares of Newmont for each Newcrest share they presently hold, equivalent to A$27.16 per share or a 21% premium to Friday’s close. The deal is contingent on Newmont being granted exclusive due diligence, according to Newcrest. Newcrest’s board is considering the proposal.
Newcrest had already been in search of a new CEO, following the resignation of Sandeep Bidwas in December. Sherry Duhe, who had previously been the chief financial officer of Woodside Energy Group Ltd., was appointed as acting CEO until a suitable permanent replacement can be found.
In Sydney, as of 2:09 p.m. Newcrest shares were up 11.7% to A$25.075.
Newcrest has already engaged JP Morgan Chase & Co. as well as Gresham Advisory Partners Ltd. as financial advisors, and Herbert Smith Freehills as legal advisor. Newmont has engaged Bank of America Securities, Centerview Partners LLC, and Lazard to serve as financial advisors, and King & Wood Mallesons, and White & Case LLP as their legal advisors.
