Newcrest share price lifts as $28.8 billion Newmont takeover greenlighted

The Newmont's acquisition of all Newcrest's shares will combine two of the world's leading gold producers.

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Key points

  • The Newcrest share price is climbing today
  • The Newcrest board unanimously supports the latest takeover offer from Newmont
  • The offer represents an implied Newcrest share price of $29.27 per share

The Newcrest Mining Ltd (ASX: NCM) share price is marching higher today, up 0.8%.

Shares in the S&P/ASX 200 Index (ASX: XJO) gold stock closed Friday trading for $28.25. Shares are currently changing hands for $28.48.

This comes after Newcrest's board announced that they now approve of the latest takeover offer lobbed by United States gold miner Newmont Corporation (NYSE: NEM).

On 16 February, the Newcrest board rejected a prior offer, which at the time represented a 22% upside to the Newcrest share price.

Here's what happening today.

What's happening with the Newmont takeover offer?

This morning, the ASX 200 miner's board reported they have agreed to proceed with Newmont's proposal to acquire 100% of its shares by way of an Australian scheme of arrangement.

The board unanimously recommends shareholders vote in favour of the offer, barring a superior proposal.

Under the agreement, Newcrest shareholders will receive 0.400 Newmont shares for each share they hold. Newcrest will also be allowed to pay a fully franked special dividend of up to US$1.10 per share prior to completion of the takeover.

When aggregated with the franked special dividend, this represents an implied Newcrest share price of $29.27 per share, or 3.6% above Friday's closing price. And it works out to an implied enterprise value of $28.8 billion.

On completion, Newcrest shareholders will hold a 31% ownership of the combined gold mining group.

Management commentary

Commenting on the offer sending the Newcrest share price higher today, chair Peter Tomsett said:

This transaction will combine two of the world's leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline.

In addition to the ongoing benefits of merging these premier portfolios, the combined group will set a new benchmark in gold production while benefitting from a material and growing exposure to copper and a market leading position in safety and sustainability.

Tomsett added, "We believe our shareholders and other stakeholders can look forward to an exciting and prosperous future."

Pending shareholder approval and other required conditions, Newcrest expects the scheme to be implemented by the end of the year.

Newcrest share price snapshot

The ASX 200 gold miner has been a very strong performer in 2023, benefiting from a rising gold price and the steady stream of Newmont takeover news.

That's all helped the Newcrest share price gain 37% since the opening bell on 3 January.

Motley Fool contributor Bernd Struben 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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