Newmont Mining Corporation (NYSE: NEM) and Goldcorp Inc. (NYSE: GG, TSX: G) today announced they have entered into a definitive agreement in which Newmont will acquire all of the outstanding common shares of Goldcorp in a stock-for-stock transaction valued at $10 billion. Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share, which represents a 17 percent premium based on the companies’ 20-day volume weighted average share prices.
The agreement will combine two gold industry leaders into Newmont Goldcorp, to create an unmatched portfolio of operations, projects, exploration opportunities, reserves and people in the gold mining sector. Newmont Goldcorp’s world-class portfolio will feature operating assets in favorable jurisdictions, an unparalleled project pipeline, and exploration potential in the most prospective gold districts around the globe. In addition to providing shareholders the largest gold Reserves per share, Newmont Goldcorp will offer the highest annual dividend among senior gold producers.
“This combination will create the world’s leading gold business with the best assets, people, prospects and value-creation opportunities,” said Gary Goldberg, Newmont’s Chief Executive Officer. “We have a proven strategy and disciplined implementation plan to realize the full value of the combination, including an exceptional pool of talented mining professionals, stable and profitable gold production of six to seven million ounces over a decades-long time horizon, the sector’s largest gold Reserve and Resource base, and a leading project and exploration pipeline. Our cultures are well aligned, with strong commitments to zero harm, inclusion and diversity, and industry-leading environmental, social and governance performance. We expect to generate up to $100 million in annual pre-tax synergies, with additional cost and efficiency opportunities that will be pursued through our proven Full Potential continuous improvement program. The combination is expected to be immediately accretive to Newmont’s net asset value and cash flow per share. We constantly review opportunities to raise our performance, and this combination represents the most promising path to deliver superior and sustainable value for our shareholders, employees, host countries and communities.”
Newmont Goldcorp’s Reserves and Resources will represent the largest in the gold sector and will be located in favorable mining jurisdictions in the Americas, Australia and Ghana, representing approximately 75 percent, 15 percent and 10 percent, respectively. Newmont Goldcorp will also prioritize project development by returns and risk, while targeting $1.0 to 1.5 billion in divestitures over the next two years to optimize gold production at a sustainable, steady-state level of six to seven million ounces annually. Supported by stable, profitable long-term production and an investment-grade balance sheet, Newmont Goldcorp will generate robust free cash flow and have the financial flexibility to fund project development and exploration in the decades ahead.
“This combination creates the world’s premier gold company,” said Goldcorp’s President and Chief Executive Officer, David Garofalo. “In addition to the depth and quality of Newmont Goldcorp’s operations, projects, exploration properties and Reserves, the combined company’s assets will be centered in the world’s most favorable and prospective mining jurisdictions and gold districts. The strategic rationale for combining Goldcorp with Newmont is powerfully compelling on many levels, and both teams are fully committed to delivering on the transaction’s value proposition for all of our stakeholders. Newmont Goldcorp will be one of Canada’s largest gold producers and will have its North America regional office in Vancouver, and expects to oversee more than three million ounces of the combined company’s total annual gold production.”
The combination of Newmont and Goldcorp will create the world’s leading gold company offering shareholders and other stakeholders:
Structure and long-term leadership succession
Following the merger, management of Newmont Goldcorp will feature proven and experienced mining and business leaders at both the Board and executive team levels, along with diverse, high-performing teams at the combined company’s regional and operating sites.
Newmont Goldcorp’s management team will be appointed on a “best talent” basis, with Gary Goldberg as Chief Executive Officer and Tom Palmer as President and Chief Operating Officer.
Building on the depth of Newmont Goldcorp’s combined global talent pool, the Board will continue to focus on strategic leadership development, robust and thoughtful succession planning, and seamless leadership transitions. As part of a planned and orderly leadership succession process, Mr. Goldberg and Newmont’s Board have been engaged in discussions anticipating a CEO succession in early 2019. In October of 2018 the Company also announced Mr. Palmer’s promotion to President and Chief Operating Officer.
To ensure a smooth and successful combination, Mr. Goldberg has agreed to lead Newmont Goldcorp through closure of the transaction and integration of the two companies. The Company expects this process to be substantially completed in the fourth quarter of 2019, when Mr. Goldberg plans to retire and Mr. Palmer will become President and Chief Executive Officer.
Path to close
The Boards of Directors of both companies have unanimously approved the transaction, including in the case of Goldcorp, on the unanimous recommendation of a special committee of independent directors of Goldcorp. The transaction is expected to close in the second quarter of 2019. Closing of the transaction is subject to approval by the shareholders of both companies; regulatory approvals in a number of jurisdictions including the European Union, Canada, South Korea and Mexico; and other customary closing conditions.
Benefits to Canada
The formation of Newmont Goldcorp ensures that Canada’s gold industry will participate in a world-leading natural resources company that operates responsibly, is invested in the long-term success of its properties, and has the financial strength to explore and develop the next generation of significant gold mines. As part of this combination, Newmont Goldcorp plans to:
Advisors and counsel
In connection with the transaction, Newmont has retained BMO Capital Markets, Citi and Goldman Sachs as financial advisors, and Wachtell, Lipton, Rosen & Katz, Goodmans LLP, and White & Case LLP as legal counsel; and Goldcorp has retained TD Securities and BofA Merrill Lynch as financial advisors and Cassels Brock & Blackwell LLP and Neal Gerber & Eisenberg LLP as legal counsel. The special committee of independent directors of Goldcorp has retained Fort Capital Partners as financial advisor and Osler, Hoskin & Harcourt LLP as legal counsel.
TD Securities and BofA Merrill Lynch have each provided an opinion to the Board of Directors of Goldcorp to the effect that, as of January 13, 2019, the consideration to be received by holders of Goldcorp common shares, is fair, from a financial point of view, to such holders, in each case, subject to the respective limitations, qualifications and assumptions set forth in such opinions. Fort Capital Partners has provided a fairness opinion to the special committee of independent directors of Goldcorp.
Newmont is a leading gold and copper producer. The Company’s operations are primarily in the United States, Australia, Ghana, Peru and Suriname. Newmont is the only gold producer listed in the S&P 500 Index and was named the mining industry leader by the Dow Jones Sustainability World Index in 2015, 2016, 2017 and 2018. The Company is an industry leader in value creation, supported by its leading technical, environmental, social and safety performance. Newmont was founded in 1921 and has been publicly traded since 1925.
Goldcorp is a senior gold producer focused on responsible mining practices with safe, low-cost production from a high-quality portfolio of mines.
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