Newcrest snaps up its Australian rival
Australian mining company Newcrest said yesterday it had agreed to a takeover by U.S. rival Newmont, creating a world-leading gold producer in a deal worth 28.8 billion Australian dollars ($19 billion).
By swallowing up Newcrest, the U.S. mining giant will cement its position as the world's biggest gold producer, with operations extending across North and South America, Africa, Australia and Papua New Guinea.
The takeover is expected to be completed by the end of 2023.
"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," Newcrest chairman Peter Tomsett said in a statement.
"It's a fantastic opportunity for Newmont because they're going to be acquiring some very good assets at what I consider to be an attractive price," said Daniel Morgan, mining equity analyst at financial services firm Barrenjoey.
The takeover still needs approval from Newcrest shareholders at a meeting expected in September or October, and agreement from competition authorities in Australia, Canada and Papua New Guinea.
It is unlikely to face serious competition challenges, Morgan said.
Denver-based Newmont expects to deliver $500 million in annual "synergies" and to generate an estimated $2 billion in cash flow as a result of the takeover, it said.
If the deal goes through, Newcrest will also pay its shareholders a tax-paid dividend of up to $1.10 per share.