Newmont Corporation has entered into a binding scheme implementation deed (SID), following completion of due diligence, under which it will acquire 100 per cent of the issued share capital in Newcrest Mining Limited (ASX:NCM).
Newcrest shareholders are to receive 0.4 Newmont share for each Newcrest share and a special dividend of up to $1.10 per share paid by Newcrest, representing a 30.4 per cent premium.
Tom Palmer, President and CEO of Newmont, said the combination of Newmont and Newcrest represented an exceptional value proposition for shareholders and other stakeholders.
Palmer said: “It creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favorable mining jurisdictions.
“Following a robust due diligence process, we have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets.
“Leveraging our experience from the acquisition of Goldcorp four years ago, 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, both part of our strategy to maximize value for shareholders and other stakeholders.”
The acquisition further strengthens Newmont’s position as a responsible gold mining leader through the combination of high-quality operations, projects and reserves concentrated in low-risk jurisdictions, including 10 Tier 1 operations that will support decades of safe, profitable and responsible gold and copper production.
Complementary businesses create substantial opportunities for optimization; estimated annual pre-tax synergies of $500 million are expected to be achieved within first 24 months.
The deal will be highly accretive for Newmont shareholders upon closing, with opportunity to enhance near-term cash flows, targeting at least $2 billion in the first two years after closing through portfolio optimization.
It also maintains Newmont’s balanced capital allocation priorities and industry-leading dividend framework, which has returned over $4.5 billion to shareholders since established in October 2020
The scheme was unanimously recommended by the Newcrest Board of Directors, subject to no superior proposal emerging for Newcrest and the Independent Expert concluding that the transaction is in the best interests of Newcrest shareholders.
Newcrest’s Chairman Peter Tomsett said the transaction combined two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of its outstanding growth pipeline.
Tomsett continued: “In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefitting from a material and growing exposure to copper and a market leading position in safety and sustainability.”