Newmont Proposes $17 Billion Takeover of Australia’s Newcrest Mining

The offer follows an earlier approach by the U.S. company that valued each Newcrest share at 0.363 Newmont shares. Newcrest said its directors had rejected that proposal as too low.

The takeover talks between Newmont and Newcrest illustrate how producers are seeking to do deals to shore up their gold reserves, cut costs and improve returns for shareholders. In 2019, Newmont acquired Canadian gold producer Goldcorp Inc. for $10 billion. The same year, Newmont and rival

Barrick Gold Corp.

formed a joint venture in Nevada to cut costs, after an earlier offer from Barrick to buy Newmont was rejected.

​Gold prices have ​moved higher this year, as fears about a recession in the U.S. and expectations that an economic slowdown will lead to rate cuts as soon as later this year make the precious metal more appealing to investors. Rising gold prices are bolstering miners’ cash reserves, giving them flexibility to attempt deals.

Newcrest said the latest all-stock proposal from Newmont implies an offer price of 27.16 Australian dollars, or $18.77, for each Newcrest share. That represents a 21% premium to its last stock price before the proposal was made, and is based on closing share prices and the U.S.-dollar-Australian-dollar exchange rate on Feb. 3. Shares in Newcrest were up by 12% around midday in Sydney, to 25.10 Australian dollars.

Newcrest said it is considering the new proposal with its financial advisers,

J.P. Morgan

and Gresham Advisory Partners, and legal adviser Herbert Smith Freehills. It said the indicative proposal is subject to several conditions that include granting exclusivity to Newmont. 

A spokesperson for Newmont wasn’t immediately available for comment. 

Write to Rhiannon Hoyle at [email protected]