Gold, Newcrest, Newmont, News, Takeover bids

Newmont’s takeover of Newcrest receives Canadian approval

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The Canadian Competition Bureau has issued a “no action” letter clearing Newmont’s previously announced transaction with Newcrest under Canadian competition law.

The Canadian Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses.

Newmont and Newcrest reached an agreement for Newmont to acquire 100 per cent of the issued shares in Newcrest by way of a scheme of arrangement in May, after a three month process.

As per the agreement, Newcrest shareholders will receive 0.400 Newmont shares for each Newcrest share held, representing a value of $29.27 per Newcrest share, or an equity value of $26.2 billion.

Newmont first made an offer to Newcrest in February, which constituted a non-binding indicative proposal and would entitle Newcrest shareholders to receive 0.38 Newmont shares for each Newcrest share held, making for a hefty total value of close to $24.45 billion.

Newcrest rejected this offer, as well as an earlier offer of 0.363 per share.

Following weeks of silence, both companies met to discuss a path for a potential multi-billion-dollar takeover.

Newmont then raised its takeover bid for Newcrest to $29.4 billion, which it labelled as being its best and final proposal.

Both companies came to a decision in May with Newmont making a $26.2 billion offer, which the Newcrest board unanimously recommended that shareholders vote in favour of.

Now with the Canadian Competition Bureau’s approval, Newmont will progress towards receiving regulatory approvals in other jurisdictions for a transaction close expected in the fourth quarter.

“The combination would create a world-class portfolio of assets with the highest concentration of Tier 1 operations, primarily in favourable, low-risk mining jurisdictions,” Newmont said.

“Upon closing of the transaction, the combined company would deliver a multi-decade production profile from ten large, long-life, low cost, Tier 1 operations, and increased annual copper production primarily from Australia and Canada.

“The combined business is anticipated to generate annual pre-tax synergies of $500 million, expected to be achieved within the first 24 months, while also targeting at least $2 billion in the first two years after closing through portfolio optimisation.”

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