Consolidation continues in the global gold industry with US major, Newmont launching an all-share bid for Canada’s Goldcorp, a deal that will bring the combined company closer to the industry leader of Barrick after it bought London-based Randgold.
The $US10 billion offer looks like being successful given the tidy premium Newmont is offering.
Newmont will acquire each Goldcorp share for 0.3280 shares of Newmont, a 17% premium based on the companies’ 20-day volume weighted average share prices.
Newmont says the combined company will target a “sustainable” annual dividend of 56 US cents a share, which analysts say will be the highest among major gold producers.
Newmont said the combined group, to be called Newmont Goldcorp, will create “an unmatched portfolio of operations, projects, exploration opportunities, reserves and people in the gold mining sector.”
Canada’s Barrick Gold paid $US6 billion to acquire Randgold to create the world’s largest gold miner.
Goldcorp shares have underperformed in recent years, falling 26% over the past 12 months.
Newmont’s chief executive Gary Goldberg will stay on to complete the transaction but will be replaced by Tom Palmer, chief operating officer of Newmont, in the final quarter of this year.
Newmont said the combined company will have the largest gold reserves and resources in the sector, with mines in the Americas, Australia and Ghana.
The company will target gold production of six to seven million ounces of gold a year and look to sell unwanted projects worth between $US1 to $US1.5 billion in the next two years.
With Barrick and Newmont owning the huge Super Pit open cut gold mine in WA, it will be sold because both companies have said they will sell unwanted assets – and the Super Pit qualifies in that category.
With Barrick and Newmont marrying major rivals, attention will now focus on Australia’s mini-major, Newcrest Mining and whether it heads down the same route.
