Lihir Gold has approved a $9.5 billion takeover offer from Newcrest Mining, but is still free to hold talks with rival bidders until 8 June.
The two companies have entered into a merger implementation agreement that will see Newcrest acquire all of Lihir’s shares.
Under the terms of the agreement, Lihir shareholders will receive one Newcrest share for every 8.43 Lihir shares, as well as 22.5 cents cash per share.
According to the companies in a joint statement, the revised offer represented a 6.4% premium on the previous bid announced on 1 April.
The Lihir directors have unanimously recommended the shareholders take up the offer in the absence of a superior proposal.
However, the directors also said the agreement was subject to an independent expert’s report into the deal from Grant Samuel.
Newcrest chairman Don Mercer said a merger between the two companies had compelling strategic logic and merit.
“The combined organisation will be Asia-Pacific’s leading gold producer, with a standout portfolio of long-life, high margin, tier one gold assets,” he said.
Lihir chairman Dr Ross Garnaut agreed with this verdict.
“We are pleased to have secured an improved financial proposal that we can recommend to our shareholders,” he said.
“Our shareholders will receive a highly attractive premium and, by receiving Newcrest shares, will participate in the benefits created by the combination of the two companies.”
Lihir shareholders can choose to adjust the combination of cash and Newcrest shares received as part of the takeover and will own between 35.5 and 36.8% of the combined organisation.
Newcrest shares this morning opened at $32.06.