Newmont Offers $16.9-B To Gobble Up Gold Producer 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, Melanie Burton and Scott Murdoch reported for Reuters.

Photo Insert: Newcrest shares surged as much as 14.4% to A$25.60, the highest since May 2022, but remained below the implied current offer price of $27.16, suggesting investors were not convinced the deal would pan out.

Newcrest is seeking a new boss, with previous chief executive Sandeep Biswas having stepped down in December, while global interest rates are expected to peak this year and turn down, polishing the outlook for gold prices.

The Australian gold miner said that it was considering the all-share proposal in a filing that was a response to media speculation over the weekend.

The initial feedback from shareholders is that they want a higher price, according to a person familiar with Newcrest's deliberations.

"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 shares surged as much as 14.4% to A$25.60, the highest since May 2022, but remained below the implied current offer price of $27.16, suggesting investors were not convinced the deal would pan out. Shares closed 9.3% higher at A$24.53.

Newmont, which is already the world's biggest gold producer by market capitalization and by ounces produced, said the combination represented "a powerful value proposition."

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