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.
_______________
Read more:
How will commodities fare in 2019?
Myth-busting leaves gold puzzle clearer
_______________
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.