Will Newmont offer more for Newcrest shares?

What price will Newcrest be acquired for?

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Well, the big piece of ASX 200 news today is the offer from US gold miner Newmont Corporation (NYSE: NEM) to acquire the shares of the ASX's largest gold miner, Newcrest Mining Ltd (ASX: NCM). At the time of writing, Newcrest shares have jumped by a whopping 11.9% to $25.12. That's after closing at $22.45 last week:

As we covered this morning, Newmont has indicatively proposed to acquire Newcrest in full in an all-scrip, conditional offer. Newmont has put up 0.38 Newmont shares for every Newcrest share.

This values the ASX 200 gold miner at around $27.40 per share, taking into account exchange rates and Newmont's share price. That represents a 22% premium to Newcrest's closing share price on Friday.

Newmont has already made an offer for Newcrest, previously offering 0.363 Newmont shares for every Newcrst share. But this was quickly rejected at the time. Newcrest shunned the deal on valuation grounds.

But this higher offer has definitely gotten some more consideration from Newcrest. The company hasn't rejected the offer. But it hasn't yet accepted it either. Here's what Newcrest said in its announcement today:

The Newcrest Board, together with its financial and legal advisers, is considering the Indicative Proposal.

The Newcrest Board advises that shareholders need not take any action in relation to the Indicative Proposal and remains fully committed to acting in the best interests of Newcrest shareholders.

So perhaps Newcrest's management is trying to wring a little extra value out of Newmont.

Could Newmont up its offer for shares of ASX 200 gold miner Newcrest?

Shareholders will certainly be hoping so, anyway. According to reporting in The Australian today, at least one shareholder stated that they didn't believe that the offer was high enough, and "would prefer a cash offer" for Newcrest shares.

Shareholders are reportedly unhappy with the recent performance at Newcrest. Here's some of what was reported:

[Shareholders] believed that the company had been deploying too much of their capital in business interests elsewhere and needed to focus more of its attention on its core operations and ensure they were firing.

So it's unclear whether these concerns will end up influencing any future offer from Newmont. Like with any transaction, Newmont will be hoping to acquire Newcrest at the cheapest price possible, just like Newcrest wants the best price it can get.

Only time will tell if Newmont is prepared to put even more on the table in its quest to acquire Newcrest. So watch this space.

In the meantime, the current Newcrest Mining share price gives this ASX 200 gold miner a market capitalisation of $20.65 billion, with a dividend yield of 1.58%.


Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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