Leading U.S. gold producer Newmont Corp. (NEM) has made a $16.9 billion U.S. takeover offer for Australian rival Newcrest Mining (NCM) that would create the world’s biggest gold company.
Newmont is offering to buy Newcrest for $31 Australian dollars ($21.37 U.S.) per share, which represents a 21% premium to Newcrest's share price before the takeover announcement was announced.
Newcrest shares surged as much as 14% to $25.60 Australian dollars on news of the takeover bid, their highest level since May 2022.
However, the offer from Newmont was quickly criticized by some investors and analysts, who claim that the U.S. gold producer is undervaluing Newcrest and trying to buy the company on the cheap during a leadership change.
Newcrest is seeking a new chief executive after previous CEO Sandeep Biswas stepped down last December. The company is expected to announce a new CEO sometime this year.
If Newmont’s bid for Newcrest is successful, the all-share deal would be the largest mining takeover and the third largest corporate buyout in Australian history.
Newmont is already the biggest gold producer in the world and one of the largest mining companies on earth.
In a written statement, Newcrest Mining’s board of directors said they are considering the proposal from Newmont.
Newcrest's operations include its Cadia mine in Australia, a large presence in North America and Papua New Guinea, and copper mining assets that are highly coveted as key to the worldwide energy transition and move away from fossil fuels.
Under terms of the deal, Newcrest shareholders would receive 0.38 Newmont shares for every Newcrest share they own, giving them a 30% stake in the combined mining company.
The proposed takeover of Newcrest Mining comes as gold prices rally and currently stand at $1,885.00 U.S. per ounce.
Investment bank Morgan Stanley (MS) recently said in a note to clients that it expects gold prices to surpass $2,000 U.S. in coming months.
Newmont’s stock has declined 21% over the last 12 months to trade at $49.85 U.S. per share.
