Newmont set to acquire Goldcorp for $10bn

March 2019 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

March 2019 Issue

In a combination designed to create a world leading gold company, Newmont Mining Corporation is to acquire all the outstanding common shares of Goldcorp Inc. in a stock-for-stock transaction valued at $10bn.

Under the terms of the agreement, Newmont will acquire each Goldcorp share at an exchange ratio of 0.3280 of a Newmont share and $0.02 for each Goldcorp share, which represents a 17 percent premium based on the companies’ 20-day volume weighted average share prices.

Furthermore, the agreement will combine two gold industry leaders into Newmont Goldcorp – to create an unmatched portfolio of operations, projects, exploration opportunities, reserves and people in the gold mining sector. Newmont Goldcorp’s world-class portfolio will feature operating assets in favourable jurisdictions, an unparalleled project pipeline, and exploration potential in the most prospective gold districts around the globe.

Newmont and Goldcorp shareholders will own approximately 65 percent and 35 percent of the combined entity, respectively.

Goldcorp is a senior gold producer focused on responsible mining practices with safe, low-cost production from a high-quality portfolio of mines. Its acquirer, Newmont, is a leading gold and copper producer, with operations primarily in the US, Australia, Ghana, Peru and Suriname.

“This combination will create the world’s leading gold business with the best assets, people, prospects and value-creation opportunities,” said Gary Goldberg, chief executive of Newmont. “We have a proven strategy and disciplined implementation plan to realise the full value of the combination, including an exceptional pool of talented mining professionals, stable and profitable gold production of six to seven million ounces over a decades-long time horizon, the sector’s largest gold reserve and resource base, and a leading project and exploration pipeline.

“Our cultures are well aligned, with strong commitments to zero harm, inclusion and diversity, and industry-leading environmental, social and governance performance,” he continues. “We constantly review opportunities to raise our performance, and this combination represents the most promising path to deliver superior and sustainable value for our shareholders, employees, host countries and communities.”

To ensure a smooth and successful combination, Mr Goldberg has agreed to lead Newmont through closure of the transaction and integration of the two companies. Newmont expects this process to be substantially completed in the fourth quarter of 2019, when Mr Goldberg plans to retire and Tom Palmer, currently Newmont’s president and chief operating officer, will become president and chief executive.

“In addition to the depth and quality of Newmont Goldcorp’s operations, projects, exploration properties and reserves, the combined company’s assets will be centred in the world’s most favourable and prospective mining jurisdictions and gold districts,” said David Garofalo, president and chief executive of Goldcorp. “The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels, and both teams are fully committed to delivering on the transaction’s value proposition for all of our stakeholders.”

Financial advisers to Newmont are BMO Capital Markets, Citi and Goldman Sachs, with Wachtell, Lipton, Rosen & Katz, Goodmans LLP and White & Case LLP acting as legal counsel. Goldcorp has retained TD Securities and BofA Merrill Lynch as financial advisers and Cassels Brock & Blackwell LLP and Neal Gerber & Eisenberg LLP as legal counsel.

The transaction has been approved by the boards of directors of both companies and is expected to close in the second quarter of 2019, subject to approval by shareholders, regulatory approvals in a number of jurisdictions, including the European Union, Canada, South Korea and Mexico, and other customary closing conditions.

Mr Garofolo concluded: “Newmont Goldcorp will be one of Canada’s largest gold producers and expects to oversee more than three million ounces of the combined company’s total annual gold production.”

Fraser Tennant