(Bloomberg) -- Newcrest Mining Ltd. has agreed to open its books after gold mining giant Newmont Corp. sweetened its offer for its Australian rival with a A$29.4 billion ($19.54 billion) bid.
Newcrest shareholders would own 31.1% of the combined company under a new offer of 0.4 Newmont shares for each Newcrest share held. That tops the Denver-based company’s $17 billion all-stock proposal from Feb. 5, which offered 0.38 of a Newmont share for each Newcrest share. The deal would reunite Newmont with an Australian company it spun off in 1990.
Newcrest also has the option to pay a $1.10 franked dividend on or around implementation of the scheme for arrangement. Including both, the bid implies an aggregate value of A$32.87 per share, Newcrest said in a regulatory filing, and an equity value of A$29.4 billion.
Newcrest’s shares were up 5.6% to A$29.865 as at 10:50 a.m. in Sydney.
The deal would create by far the world’s biggest gold miner, with assets in North and South America, Australia, West Africa, and Papua New Guinea. It would also increase Newmont’s exposure to copper, a key material in the clean energy transition, at a time when analysts are predicting major shortages of the wiring metal over the coming decade. Newcrest has said it wants copper to make up more than 50% of revenue by the end of the decade, up from around a quarter now.
Newmont’s higher offer follows other large gold deals including the $5.2 billion takeover of Yamana Gold Inc., which is expected to close by the end of March, and Angico Eagle Mines Ltd.’s $10.4 billion takeover of Kirkland Lake Gold Ltd. a year ago. Mining companies are turning to acquisitions to gain scale and address growing industry challenges of rising operating costs, declining output and harder-to-mine resources.
Due diligence is expected to take approximately four weeks. Newmont told Newcrest the offer represented “its best and final price in the absence of a competing proposal,” the Melbourne-based miner said in the statement.
The revised offer “might prove compelling based on recent transaction premiums and peer valuations,” Bloomberg Intelligence analyst Mohsen Crofts said in a note Tuesday morning.
The deal is dependent on a unanimous recommendation from the Newcrest board that shareholders vote in favor. While Newcrest opened its books to Newmont, it stopped short of making that recommendation in Tuesday’s statement.
--With assistance from Harry Brumpton.
(Updates Newcrest’s share price in fourth paragraph)
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