Newcrest Rejects Newmont's $17 Billion Takeover Proposal but Leaves Deal Door Open -- Update
February 16 2023 - 12:56AM
Dow Jones News
By Rhiannon Hoyle
Australia's largest listed gold miner on Thursday rejected a
roughly $17 billion bid from Newmont Corp. but said it is open to
talks with the U.S. gold giant to advance what would be the
largest-ever takeover in the global gold industry.
Melbourne-based Newcrest Mining Ltd., one of the world's largest
gold-mining companies, said the all-stock proposal put forward by
Newmont was too low. However, the company said it is willing to
give its American rival access to limited nonpublic information to
work out if it wants to increase its offer.
Newmont, which is based in Colorado and is the world's top gold
producer, submitted a conditional and nonbinding indicative
proposal on Feb. 5 to acquire the Australian company at a price of
0.380 Newmont share for each Newcrest share.
That was a sweetened offer from an initial rebuffed approach
that valued each Newcrest share at 0.363 Newmont share, Newcrest
said earlier this month.
Newmont has said the businesses are complementary and a combined
entity--which, under the latest proposal, would have been owned 30%
by Newcrest shareholders and 70% by Newmont--could "set the
standard for sustainable and responsible gold mining."
A Newmont spokesman declined to comment on Newcrest's rejection
Thursday.
Any information provided to Newmont would be on a nonexclusive
basis and require a nondisclosure agreement, Newcrest said.
"This is really us offering, if Newmont is open to that, to just
having a private conversation with some very limited nonpublic
information just to help them better understand what we see as the
true value of our company," said Interim Chief Executive Sherry
Duhe. Newcrest is waiting to hear from Newmont on whether it will
take up that offer, she told reporters.
The information could include private details about Newcrest's
long-run growth projects, Ms. Duhe said, declining to elaborate
further.
"The onus of the merger now returns to [Newmont] and finding a
sufficient premium for [Newcrest] which also satisfies its own
shareholders," RBC Capital Markets analyst Alex Barkley said.
Some analysts said the American company's interest in Newcrest
could flush out competing bids for some or all of Newcrest's
operations. The company runs mines in Australia, Canada and Papua
New Guinea.
Another gold-mining giant, Barrick Gold Corp., has signaled it
isn't interested in bidding for Newcrest. Chief Executive Mark
Bristow on Wednesday said he won't pursue deals to simply grow
Barrick's scale.
"I believe our shareholders wouldn't like that either," he told
analysts on a call.
Ms. Duhe said the Australian company is seeking to reserve its
rights by asking to talk on a nonexclusive basis. "There is nothing
that has occurred that would warrant us saying anything public
about any other conversations with any other companies on any
matters, whatsoever," she said.
Newcrest on Thursday reported a 2% decline in first-half net
profit but said underlying earnings increased. The company
surprised investors with a special dividend that Newcrest said came
from the early repayment of a credit facility by Canada's Lundin
Gold Inc., in which Newcrest holds a stake.
The approach by Newmont illustrates how gold producers are
seeking to do deals at a time when the industry is struggling to
make large new discoveries of the precious metal. In 2019, Newmont
acquired Canadian gold producer Goldcorp Inc. in a transaction
valued at $10 billion. That same year, Newmont and rival Barrick
Gold formed a joint venture in Nevada to cut costs, after an
earlier offer from Barrick to buy Newmont was rejected.
Newcrest's network of low-cost mines have some of the longest
lives in the industry globally. The company's assets can run for 22
years before becoming depleted, well above most of its listed
rivals, said analysts at Barrenjoey, an Australian investment bank.
The miner also produces copper, an industrial metal in demand among
investors because of its heavy use in electric vehicles and
renewable-energy infrastructure.
Newmont's approach comes amid an upheaval at Newcrest, which in
December said Sandeep Biswas will leave the company after eight
years as chief executive. Newcrest named Ms. Duhe, its former chief
financial officer, as interim CEO while it searched for Mr.
Biswas's successor.
Ms. Duhe said the search for a permanent chief executive is
continuing.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
February 16, 2023 00:41 ET (05:41 GMT)
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