Newmont Offers US$17 Billion for Newcrest

Newmont confirmed this week that it submitted a non-binding proposal to acquire 100% of the issued share capital of Newcrest Mining Limited (Newcrest) through a scheme of arrangement.

The US group announced it would buy the Australian company for US$17 billion. If the transaction is completed with the proposed amount, this would be the biggest transaction of the gold-producing sector, surpassing Newmont’s acquisition of Goldcorp for US$10 billion. 

Newmont’s proposal to combine with Newcrest is based on 0.380 Newmont shares per Newcrest share, which would result in the combined company being owned 30% by Newcrest and 70% by Newmont. Newcrest is planning to pay US$18.84 per share. 

Newcrest shares increased by 9.27% to US$17.01 on Monday on the Sydney Stock Exchange, lower than the price offered by Newmont.

“We believe a combination of Newmont and Newcrest presents a powerful value proposition to our respective shareholders, workforce and the communities in which we operate,” said Tom Palmer, President and CEO of Newmont. “The proposed transaction would join industry-leading portfolios of assets and projects to create long-term value across the combined global business, and we welcome the consideration of Newcrest’s board of directors,” he added. 

Moreover, Newmont’s proposal is subject to customary conditions, including due diligence to the satisfaction of both parties, entry into a scheme implementation agreement and a recommendation from the Newcrest Board of Directors that Newcrest shareholders vote in favor of the proposal.

Newmont is a US-based mining company. It has operations in North and South America, as well as in Australia and Africa and is the only gold producer listed in S&P 500 Index. Newmont has been recognized for its principled environmental, social and governance (ESG) practices. Its Peñasquito operation is one of the most important gold projects in Mexico, which has produced over 50,000oz of gold, representing 20 percent of the national production of the precious metal.

Recently, Newmont announced it reached an agreement following negotiations headed by MORENA Senator and President of the National Union of Mining, Metallurgic, Iron, Steel and Similar Workers of the Mexican Republic (SNTMMSSRM), Napoleón Gómez. Under the agreement, the company agreed to pay its 2,500 unionized employees an uncapped bonus of up to 10 percent, costing the company around US$70 million, similar to the payments of 2021’s production results. According to the company, the agreement was reached without strikes and via a respectful dialogue between the company and the workers represented by Gómez. The accord will also ensure continued operation at the Peñasquito unit in the future.