The Newcrest Mining Ltd (ASX: NCM) share price is on the move on Tuesday morning.
At the time of writing, the gold miner's shares are up 6.5% to $30.12.
Why is the Newcrest share price rising?
The Newcrest share price is defying a pullback in the gold price overnight after the company received an improved takeover proposal from US giant Newmont.
Back in February, Newcrest received and rejected an all-scrip offer that was the equivalent of $27.40 per share. This followed the rejection of a previously undisclosed $26.15 per share offer.
The Newcrest board felt that the offer undervalued the company. It explained:
The Board has considered the Indicative Proposal and has unanimously determined to reject the offer as it does not represent sufficient value for Newcrest shareholders.
New offer
This morning, Newcrest revealed that it has received an improved offer of 0.4 Newmont shares per Newcrest share.
In addition, the conditional and non-binding proposal permits Newcrest to pay a franked special dividend of up to US$1.10 per share.
This represents an aggregate implied value of A$32.87 per share, which is a 16% premium to the current Newcrest share price. It also values the company's equity at $29.4 billion and implies an enterprise value of $32 billion.
The good news for Newmont is that this offer has been enough to get it access to Newcrest's books. The miner has agreed to grant Newmont the opportunity to conduct confirmatory due diligence to put forward a binding proposal.
However, management has warned that there is no certainty that the revised proposal will result in a binding offer for consideration by shareholders. As a result, shareholders do not need to take any action at this stage.
Newcrest will continue to keep the market informed of any material developments in accordance with its continuous disclosure obligations.
