On February 5, 2023, S&P Global reported Newcrest's market announcement of a nonbinding indicative bid from US mining giant, Newmont to wholly acquire Newcrest through a scheme of arrangement.
Despite Newmont's mammoth offer of U$16.9 billion, Newcrest made the decision to reject it, stating that the offer undervalued the company. This rejection came in light of Newcrest's profits exceeding expectations, indicating that the company believed it deserved a higher valuation.
Newcret board stated, "It does not represent sufficient value for Newcrest shareholders”.
However, the board said it would open its books for limited due diligence to see if it could extract a better offer from the suitor"
Newcrest interim CEO Sherry Duhe said in an interview with Bloomberg that the company “is worth a lot more” than the almost $17bn offered.
“The company is not up for sale and this [bid] was unsolicited,” Duhe said, adding that Newcrest has “offered Newmont limited conversations to share a bit more about where we see value in the portfolio, and so obviously that’s with them now to see if they’d like to decide to engage”.
Newmont went back to the drawing board and came back with a new offer that was more 'palatable' as described by Australian Financial Report (AFR).
Newmont offered Newcrest shareholders more equity and a short-term cash sweetener under an improved bid that was good enough to convince Newcrest to open its books for a formal due diligence process.
Newcrest said the improved offer was 16 percent more generous than the initial offer that was lobbed after the close of trading on February 3 and values its shares at $32.87 as reported by AFR.
From U$16.9 billion, the offer went up to US19.2 billion, which has been accepted by Newcrest making the takeover one of the biggest-ever transactions in the gold sector, the combination boosts Newmont’s exposure to copper according to Bloomberg.
The deal is reported to surpass Newmont’s purchase of rival Goldcorp Inc. in 2019.
According to S&P Global, the merger firmly positions Newmont as the world's largest gold producer, with expected production of 9.4 million ounces in 2023. The deal also gives the Newmont further exposure to copper, which faces a predicted global supply deficit from 2026.
Newcrest Mining owns six producing mines and three project developments: Red Chris in Canada, Havieron in Western Australia, and Wafi-Golpu in Papua New Guinea.
In PNG, Newcrest has mining operations in Lihir, New Island province, and shares 50% ownership of the Wafi-Golpu Project in Morobe province through the Wafi-Golpu Joint Venture with Harmony Gold Mining Company Limited.
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