Australian mining company Newcrest announced Monday that it has agreed to be bought by U.S. rival Newmont for US$19 billion, creating a new global gold production giant. By acquiring Newcrest, the U.S. mining group is expanding its vast gold and copper mining assets, giving it a global presence from North and South America to Africa, Australia and Papua New Guinea.
Shareholders of Melbourne-based Newcrest will receive 0.4 shares of the U.S. company for every share they currently hold, making a total of 31 percent of the merged group, the Australian company said. According to Newrest, the value of the deal is A$28.8 billion, or US$19 billion. "The new entity will set a new standard in gold production while benefiting from significant and growing exposure to copper and a market-leading position in safety and sustainability," Peter Tomsett, Newcrest's president, said in a statement.
Newcrest advocated the takeover offer "unanimously," he added, three months after its board rejected a previous $17 billion bid on the grounds that it did not provide "sufficient value" to shareholders. Newmont chief executive Tom Palmer said the combined group was creating an industry-leading product line, with a "decades-long prospect of gold and copper production" in the world's most lucrative mining areas. "We have identified a number of opportunities to unlock substantial value and will bring our experience and expertise to Newcrest's complementary and exceptional product line, consisting of low-cost, long-lived gold and copper assets," he said in a statement.
Denver-based Newmont said it expects synergies in the range of US$500 million annually. "This agreement also increases Newmont's annual production of copper – a vital metal for the new energy economy – and adds nearly 50 billion pounds (22.7 million tonnes) of Newcrest's copper reserves and resources to our robust and balanced product mix," Palmer said. Newcrest shares were up 1.1% at AU$28.56 on Monday at the Australian Stock Exchance (ASX).