Newmont's $10bn purchase of Goldcorp to create world's biggest gold miner

Huge deal comes as M&A returns to the sector following Barrick's $5.4bn acquisition of Rangold in October

Mega deal will lead to the biggest miner of the yellow metal. Reuters

Newmont Mining will buy rival Goldcorp in a deal valued at $10 billion, creating the world’s largest gold miner and cementing a return of M&A to the industry.

The transaction comes just three months after another blockbuster gold deal when Barrick Gold agreed to acquire Randgold Resources in a $5.4bn transaction. Today’s deal creates a miner that exceeds Barrick-Randgold in scale, producing about 7.9 million ounces of gold a year.

“This combination will create the world’s leading gold business,” said Gary Goldberg, Newmont’s chief executive.

Goldcorp shares surged in US pre-market trading, climbing 13 per cent to $10.92 as of 5:42am in New York.

Newmont will pay 0.3280 of its own shares for each Goldcorp share, a premium of 17 per cent to the weighted average share price of the companies over the last 20 days. Newmont also plans to pay 2 cents for each Goldcorp share.

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Mr Goldberg, who has lead Newmont since 2013, will remain CEO until the deal and integration of the two companies is complete - likely in the fourth quarter - after which he will hand over to chief operating officer Tom Palmer.

The new company plans sell up to $1.5bn in assets over the next two years, echoing a similar Barrick pledge to concentrate on the best-performing mines. Newmont also promised initial cost savings from the merger of $100 million a year.

Newmont has retained BMO Capital Markets, Citi and Goldman Sachs as financial advisors, while Goldcorp has TD Securities and BofA Merrill Lynch.