Gold miner Newmont strikes $19 billion deal for Australia’s Newcrest

The board of Australia’s Newcrest Mining has unanimously backed a $29bn ($19bn) takeover offer by US rival Newmont, paving the way for the world’s biggest gold miner to consolidate its hold on the region Is.

Subject to a shareholder vote and regulatory approval, Newmont will acquire Newcrest – which was originally established in the 1960s before being spun off through a merger with BHP – with an offer of 0.4 shares for each in the Australian business .

The deal will consolidate Denver-based Newmont’s operations in Australia, Canada and Papua New Guinea and potentially create a ripple effect in the industry as smaller mines owned by the combined business are shed.

It is the latest example of consolidation within the global mining industry as major companies seek to buy promising operations to increase the scale and exposure to critical minerals needed for the energy transition. Its exposure to copper has been significantly increased by Newmont’s move and the acquisition of rival Oz Minerals by BHP, Turquoise Hill by Rio Tinto and Alkem’s merger with Livent to create a more substantial lithium player.

Newmont first approached Newcrest with an all-share offer in February, but that was declined. It raised its bid to A$29.4bn in April, prompting Newcrest’s board to open its books.

The slightly lower value of the deal, which includes debt, reflects a decline in Newmont’s share price over the past two months, but still amounts to a more than 30 percent premium to where it stood just before the initial offering.

US-listed Newmont chief executive Tom Palmer – an Australian who hails from the mining town of Broken Hill – said the acquisition represented “extraordinary value” for shareholders. “This creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world’s most favorable mining jurisdiction,” he added.

ANZ Bank said the deal comes against a backdrop of gold prices nearing record highs due to banking sector issues, the Federal Reserve’s dovish stance and uncertainty around the US debt ceiling.

Rahul Anand, an analyst at Morgan Stanley, said in a note: “We view the deal, if approved, as an opportunity to enhance project sequencing and development optionality as well as diversify the combined entity’s operations into low-risk jurisdictions.” Provides operational synergy for

Palmer said due diligence has identified $500 million of synergies that the company expects to realize within two years of transaction completion, as well as opportunities to generate up to $2bn of cash flow over that period.

As part of the acquisition agreement, Newcrest will pay a final dividend to shareholders. The combined business will retain a secondary listing on the Stock Exchange of Australia.