Newcrest share price jumps on new takeover offer

This gold share is glittering on Tuesday thanks to a takeover approach.

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A man clenches his fists in excitement as gold coins fall from the sky.

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Key points

  • Newcrest shares are rising on Tuesday
  • This follows news that US rival Newmont has made an improved takeover offer
  • Newcrest rejected two previous offers in February

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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