Newmont (NEM), the world's largest gold mining in the world, acquired its Australian competitor Newcrest Mining Ltd. for $19.2 billion in the industry's largest deal to date.
Newcrest shareholders will receive 0 .4 Newmont shares in exchange for each Newcrest share and a special dividend of $1.10 per share paid by Newcrest as part of the deal, via an Australian Scheme of Arrangement announced on Monday.
The purchase will allow the Colorado-based company, already the largest gold mining company in the world, to expand its global reach with mining operations across the Americas, Africa, Australia and Papua New Guinea. If approved by regulators, it would be the largest gold mining transaction to date, surpassing the company's purchase of rival Goldcorp in 2019.
Gold miners around the world are facing stagnant production amid rising input costs and harder-to-mine deposits. This reinforces the attractiveness of mergers and acquisitions in the industry, as companies seek to increase volumes and improve efficiency.
The lucrative deal comes as gold prices rise on the metal's appeal as a safe-haven asset during times of economic uncertainty. Over the past few weeks, the price of gold has traded just below the all-time high of around $2,070 per ounce set in August 2020.
Newmont originally offered $17 billion for the acquisition earlier this year, before softening the closing terms of the deal.
Newmont's shares were at roughly stable at the start of Monday's session. They are down almost 3% since the start of the year, compared to a return of 35% for Newcrest shares over the same period.
investopedia.com
