(Bloomberg) — Newmont Corp. has offered to buy Australia’s Newcrest Mining Ltd. in a $17 billion deal that would strengthen the U.S. mining powerhouse’s position in copper and gold.
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The acquisition, if completed, would be the largest globally so far this year and one of the largest in Australian history, according to data compiled by Bloomberg. Newcrest jumped as much as 14% in early trading in Sydney, the most since 2008.
The proposed deal comes as gold prices have seen a sustained period of strength since 2020 and are up about 15% since early November. It would increase Newmont’s footprint in copper, which is becoming more sought after due to its use in renewable energy and electric vehicles as economies decarbonize.
Newmont confirmed it made the offer in a statement Sunday night Denver time, saying the deal “presents a powerful value proposition” for both companies.
Newmont, already one of the world’s largest gold miners with a market value of nearly $40 billion, made an earlier lower offer for Newcrest that its board rejected.
“The strength of the Australian dollar, gold prices and declining global reserves suggest further acquisitions are likely, particularly for companies like Newcrest, which has significant copper exposure,” the Bloomberg industry analyst said. Intelligence, Mohsen Crofts, in a note on Monday.
Newcrest earns most of its revenue from gold and the rest from silver and copper, with mines in Australia, Canada and Papua New Guinea. The company plans to increase the copper component to take advantage of the expected increase in demand, Sherry Duhe, interim chief executive, said in an interview in November.
Under the proposed deal, shareholders would receive 0.38 Newmont shares for every Newcrest share they own, which equates to A$27.16 per share or a 21% premium as of Friday’s close, the Newcrest-based miner said. Melbourne in a regulatory filing on Monday. The board is considering the proposal, which is conditional on Newmont being granted exclusive due diligence, Newcrest said.
The approach comes amid Newcrest’s search for a new chief executive following the resignation of Sandeep Biswas in December. Duhe, the former chief financial officer of oil and gas producer Woodside Energy Group Ltd., is acting chief executive until a permanent replacement is found.
Newcrest shares rose 11.7% to A$25,075 as of 2:09 p.m. in Sydney.
The Australian miner has hired JP Morgan Chase & Co. and Gresham Advisory Partners Ltd. as its financial advisers and Herbert Smith Freehills as its legal adviser. Newmont said it had retained BofA Securities, Centerview Partners LLC and Lazard as financial advisers, and King & Wood Mallesons and White & Case LLP as legal advisers.
–With assistance from Harry Brumpton and Jeff Sutherland.
(Adds a comment from Newmont. Adds Newcrest’s current stock movement in the 10th paragraph. An earlier version of this story corrected US miner to Australian miner in the final paragraph.)
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