Australian mining company Newcrest Mining Ltd yesterday said it had agreed to a takeover by US rival Newmont Corp, creating a world-leading gold producer in a deal worth A$28.8 billion (US$19.25 billion).
By swallowing up Newcrest, the US mining giant would cement its position as the world’s biggest gold producer, with operations extending across North and South America, Africa, Australia and Papua New Guinea.
Melbourne-based Newcrest’s shareholders are to receive 0.4 of the US firm’s shares for each Newcrest share, giving them 31 percent of the combined group, the Australian firm said.
Photo: Reuters
The takeover, expected to be completed by the end of this year, has an implied value of A$28.8 billion, it said.
“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.
Newcrest had “unanimously” recommended the takeover offer to shareholders, he said, three months after its board rejected an earlier US$17 billion approach as too cheap.
“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 Markets Pty Ltd.
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.
“Even though it is going to create the world’s largest gold miner, it is not going to lead to consolidation in any sense that is going to be harmful for consumers,” he said.
Newmont chief executive Tom Palmer said the combined group would have an industry-leading portfolio with a “multi-decade gold and copper production profile” in the world’s most favorable mining jurisdictions.
“We have identified a number of opportunities to unlock substantial value and will apply our experience and expertise to Newcrest’s complementary and exceptional portfolio of long-life, low-cost gold and copper assets,” he said in a statement.
Denver-based Newmont expects to deliver US$500 million in annual “synergies” and to generate an estimated US$2 billion in cash flow as a result of the takeover, it said.
“This transaction also increases Newmont’s annual copper production — a metal vital for the new energy economy — and adds nearly 50 billion pounds [22.68 billion kilograms] of copper reserves and resources from Newcrest to our robust and balanced portfolio,” Palmer said.
Newcrest shares were trading 1.3 percent higher at A$28.61 in early afternoon trade on the Australian Securities Exchange.
If the deal goes through, Newcrest will also pay its shareholders a tax-paid dividend of up to US$1.10 per share.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS