© Reuters. FILE PHOTO: A small toy and imitation gold is seen in front of the Newcrest logo in this illustration taken November 19, 2021. REUTERS/Dado Ruvic/Illustration
By Melanie Burton and Sameer Manekar
MELBOURNE (Reuters) – Australia’s No 1 gold miner Newcrest Mining (OTC:) Ltd said it was reviewing a $16.9 billion buyout offer from US giant Newmont Corp following the when they had previously rejected bids, in a deal that would boost the operations of both miners in Australia and Canada.
The full share offer comes as Newcrest searches for a new boss, with previous chief executive Sandeep Biswas stepping down in December and as global interest rates are expected to peak for the year. today and lower, improving expectations for gold prices.
The indicative offering price implies a premium of approximately 21% over Newcrest’s final closing value of AU$22.45, with Newcrest shareholders receiving 0.380 Newmont shares for each Newcrest share. That’s a 4.7% improvement from the previous 0.363-per-share offer that Newcrest rejected, the miner revealed on Monday.
Shares of Newcrest jumped as much as 14.4% to the highest level since May 2022.
“The Newcrest Board of Directors, together with financial and legal advisors, are reviewing the nomination proposal,” the Australian gold miner said in a response to media speculation. through the weekend.
Newcrest said the previous bid was rejected because it didn’t deliver enough value to shareholders.
Newmont did not immediately respond to a request for comment.
Andy Forster, senior investment manager at Argo Investments in Sydney, which owns a stake in Newcrest, said the deal would be attractive to Newmont considering Newcrest’s flagship Cadia property in Australia and its strong footprint. its ever-expanding footprint in North America.
“This is probably a pretty good time,” he added. Newcrest is a bit vulnerable at the moment to the leadership transition.”
Newcrest is expected to announce a new chief executive this year after Biswas announced his retirement after eight years.
Sherry Duhe, formerly chief financial officer, who joined Newcrest last February, serves as interim chief executive while the global search for a replacement internally and externally is underway.
An investment banker who was not authorized to speak publicly on the matter said Newcrest had been considered a target in recent years due to its average performance, but only a handful of buyers were large enough. to buy it.
Newmont, with a market value of $39.6 billion, is already the world’s largest gold producer by market capitalization and by ounces produced. Its last big deal was a $10 billion purchase of Goldcorp Inc in 2019.
The all-inclusive nature of the offer means the timing is more likely to be related to Newcrest’s leadership flaw than a big call on gold prices, but it could also reflect a constructive view. for precious metals, the banker added.
Risks are growing for gold to break higher, Morgan Stanley (NYSE:) in a January 16 note, noting that their macroeconomists are now forecasting lower interest rates and a weaker US dollar, in favor of the metal.
Morgan Stanley is heading for a bullish case hitting $2,160 in the fourth quarter, up from $1,866 an ounce.
