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US gold giant Newmont Mining upped its offer to $19.5 billion (A$29.4 billion) to acquire Newcrest Mining. This is the final offer from Newmont. If the deal is accepted and finalized, Newmont will further confirm it as the world’s biggest gold producer.
The American company offered Newcrest shareholders further equity and short-term cash to sweeten the deal and have everyone agree. As per industry calculations, the deal will be the third biggest in the industry globally and one involving an Australian company. The merged entity will have an output about twice the size of the nearest competitor Barrick Gold Corp.
Tom Palmer, the CEO of Newmont, is upbeat about the deal and sees this as an opportunity to set new safe, profitable standards of “responsible” mining.
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“This transaction would strengthen our position as the world’s leading gold company by joining two of the sector’s top senior gold producers and setting the new standard in safe, profitable, and responsible mining,” Palmer said in a statement.
Under the updated offer, Newcrest shareholders would receive 0.400 Newmont shares for every share held, with an implied value of A$32.87 per share. In February, Newmont offered an exchange ratio of 0.380 that Newcrest’s board unanimously rejected.
The American Company is also offering a franked special dividend of up to $1.10 per share and wants a unanimous board approval to proceed with the binding offer after completing the due diligence period of around four weeks.
Simon Mawhinney, chief investment officer at Newcrest’s top shareholder Allan Gray Australia felt that the new offer struck the right balance.
“I think this offer strikes a better balance. We are positively disposed to the Newcrest-Newmont merger and would intend to remain a shareholder of the combined entity were a transaction to proceed,” said Mawhinney.
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