Newmont Corp and Newcrest Mining Ltd said on Monday they would merge to create the world’s largest gold producer, with a market capitalization of about $100 billion.
The deal, which is expected to close in the second half of 2023, would create a company with annual gold production of about 6.5 million ounces, up from 5.5 million ounces for Newmont and 3.8 million ounces for Newcrest.
The combined company would have a strong portfolio of assets, including Newmont’s operations in the United States, Australia, and Ghana, and Newcrest’s operations in Australia, Indonesia, and Papua New Guinea.
The merger would also create a more diversified gold producer, with exposure to different regions and mining styles.
“This combination is a compelling opportunity to create the world’s premier gold company,” said Gary Goldberg, Newmont’s chief executive officer. “Together, we will have the scale, resources, and portfolio to deliver sustainable growth and value for our shareholders.”
The deal is expected to be accretive to Newmont’s earnings per share in the first full year after closing and to Newcrest’s earnings per share in the second full year after closing.
Newmont shareholders would own about 62% of the combined company, while Newcrest shareholders would own about 38%.
The deal has been unanimously approved by the boards of directors of both companies. It is subject to approval by Newmont and Newcrest shareholders, as well as regulatory approvals.
The merger is the latest in a wave of consolidation in the gold mining industry. In recent years, several major gold miners have merged, including Barrick Gold Corp and Randgold Resources Ltd, and Goldcorp Inc and Gold Fields Ltd.
The mergers are driven by a number of factors, including the need to reduce costs, increase scale, and gain access to new assets. The gold mining industry is also facing increasing competition from new entrants, such as junior miners and explorers.
The merger between Newmont and Newcrest is expected to create a more competitive and efficient gold producer. The combined company will be better positioned to weather the challenges facing the gold mining industry and to deliver long-term value for shareholders.
Here are some additional details about the proposed merger:
- The deal is expected to be worth $17.8 billion, including the assumption of Newcrest’s debt.
- Newmont shareholders would own about 62% of the combined company, while Newcrest shareholders would own about 38%.
- The deal is expected to close in the second half of 2023.
- The merger is subject to approval by Newmont and Newcrest shareholders, as well as regulatory approvals.
Here are some of the potential benefits of the merger:
- The combined company would have a strong portfolio of assets, including Newmont’s operations in the United States, Australia, and Ghana, and Newcrest’s operations in Australia, Indonesia, and Papua New Guinea.
- The merger would also create a more diversified gold producer, with exposure to different regions and mining styles.
- The deal is expected to be accretive to Newmont’s earnings per share in the first full year after closing and to Newcrest’s earnings per share in the second full year after closing.
Here are some of the potential risks of the merger:
- The deal could face regulatory scrutiny.
- The combined company could face challenges integrating the two businesses.
- The deal could be dilutive to Newmont and Newcrest shareholders in the short term.
The proposed merger between Newmont and Newcrest is a positive development for the gold mining industry. The deal is expected to create a more competitive and efficient gold producer that is better positioned to weather the challenges facing the industry.
