The affiliation may become one of the most important and largest not only in Australia but in the world this year. Newcrest shares gained 14% in early trading in Sydney.
The offer to buy is mainly due to the fact that gold prices have been on the rise for two years and have gained 15% since the beginning of November. The takeover will boost Newmont’s production of copper, which is growing in demand due to its use in renewable energy and electric vehicles.
Newmont had previously offered a lower price to Newcrest, which the board of directors rejected.
Newcrest’s revenues come mostly from gold mining and the rest from silver and copper, with mines in Australia, Canada, and Papua New Guinea. The company wants to increase copper production amid rising demand.
As part of the deal, shareholders will receive 0.38 Newmont shares for each Newcrest share owned, equivalent to A$27.16 per share or a 21% closing premium. Newcrest management is considering this proposal on the condition that Newmont is granted exceptional due diligence.
The offer comes just as Newcrest is looking for a new CEO following the resignation of Sandeep Biswas in December.
Shares of Newcrest added 11.7% to AU$ 25.075 this afternoon.
Newcrest turned to JP Morgan Chase & Co. and Gresham Advisory Partners Ltd. as financial advisors and Herbert Smith Freehills as legal advisors. Newmont has partnered with BofA Securities, Centerview Partners LLC, and Lazard as financial advisors, and King & Wood Mallesons and White & Case LLP as legal advisors.
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