Analysts say Newmont’s bid to create global gold behemoth undervalues Newcrest
Top gold producer Newmont Corp said it had made a $16.9 billion offer for Australian peer Newcrest Mining Ltd to build a global gold behemoth, although investors and analysts said it undervalued the target amid a leadership change.
“A good litmus test for a reasonably-priced deal is one where both seller and buyer feel somewhat aggrieved by selling out too low or by paying too much,” said Simon Mawhinney, chief investment officer at Allan Gray, Newcrest’s largest shareholder with a 7.36% stake. “It’s not clear to me that this kind of symmetry exists with these deal terms.”
Newcrest’s operations include its top class Cadia asset in Australia, an expanding footprint in North America and Papua New Guinea, and growth potential in copper, highly prized as key to the energy transition. BHP Group offered $6.4 billion for Australian copper miner Oz Minerals in December. Newcrest shareholders would receive 0.380 Newmont shares for every Newcrest share, giving them a 30% stake in the enlarged miner. It is a 4.7% improvement from a previous 0.363 per share offer that Newcrest already rejected for not providing enough value to shareholders, Newcrest disclosed on Monday.
Newcrest has been viewed as a target in recent years given its middling performance, but only a handful of buyers are big it enough to take it out, said an investment banker who was not authorized to speak publicly about the matter.
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