Newmont Deal Faces Opposition -- WSJ
March 22 2019 - 03:02AM
Dow Jones News
By Jacquie McNish
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 22, 2019).
Paulson & Co. said Thursday it opposes Newmont Mining
Corp.'s $10 billion merger with Goldcorp Inc. because it would
transfer away significant gains from a recently announced Nevada
joint venture.
"Under the current terms we are unable to support the
transaction," the hedge-fund firm wrote Newmont Chief Executive
Gary Goldberg in a letter, which The Wall Street Journal first
reported.
The firm, founded by John Paulson, said in its letter that it
owns 14.2 million shares, which would rank it as one of Newmont's
largest shareholders. It is unclear when Paulson acquired its
stake.
A spokesman for Newmont said the company is evaluating Paulson's
letter.
Newmont announced in January the all-stock merger agreement,
which would pay shareholders of Canada's Goldcorp a 17% premium and
create the world's largest gold producer.
Barrick Gold Corp., currently the leading gold producer and a
longtime Newmont suitor, responded to the deal by threatening a
possible hostile bid for its Colorado rival. Instead, Newmont and
Barrick announced last week a less ambitious agreement to combine
their Nevada gold-mining operations. The two companies estimate the
joint venture, to be operated by Barrick, would yield nearly $5
billion in cost cuts and production gains.
Paulson estimated Newmont shareholders would lose about 35% of
the planned Nevada gains to Goldcorp shareholders under the current
merger agreement. The hedge fund said the 17% premium Newmont is
offering Goldcorp shareholders and its potential gains from Nevada
are "unjustified" given Goldcorp's record of "poor
performance."
Goldcorp's share price had fallen about 75% from its 2011 peak
before the merger pact was announced in January. The planned deal
has met resistance from other Newmont shareholders and financial
analysts.
Paulson said it would support the merger if the deal eliminated
the premium being paid. That would require dropping the agreed-upon
exchange ratio to 0.254 Newmont share paid for each share of
Goldcorp from the current rate of 0.328.
Newmont and Goldcorp shareholders are set to vote on the
proposed combination next month. Newmont has agreed to pay Goldcorp
a $650 million breakup fee if the merger fails. But Paulson said in
its letter that the fee isn't required if Newmont shareholders
reject the deal.
A Goldcorp spokeswoman wasn't immediately available for
comment.
Write to Jacquie McNish at Jacquie.McNish@wsj.com
(END) Dow Jones Newswires
March 22, 2019 02:47 ET (06:47 GMT)
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