Newmont Mining has agreed to acquire Goldcorp in a friendly all-stock deal valuing the Canada-headquartered company 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% premium based on the companies’ 20-day volume weighted average share prices.
The deal comes just weeks after Barrick Gold merged with Randgold Resources to create a new industry giant.
“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 said.
“Newmont Goldcorp’s world-class portfolio will feature operating assets in favourable 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.”
Gary Goldberg, Newmont’s Chief Executive Officer, said: “We have a proven strategy and disciplined implementation plan to realise the full value of the combination, including an exceptional pool of talented mining professionals, stable and profitable gold production of 6-7 Moz 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 programme.”
Newmont Goldcorp’s reserves and resources will represent the largest in the gold sector, located in favourable mining jurisdictions in the Americas, Australia and Ghana, representing approximately 75%, 15% and 10%, respectively.
Newmont Goldcorp will also prioritise project development by returns and risk, while targeting $1.0 to 1.5 billion in divestitures over the next two years to optimise gold production at a sustainable, steady-state level of 6-7 Moz annually.
Goldcorp’s President and Chief Executive Officer, David Garofalo, said: “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.”
Following the merger, Newmont Goldcorp’s management team will be appointed on a “best talent” basis, Newmont said, with Gary Goldberg as Chief Executive Officer and Tom Palmer as President and Chief Operating Officer.
As part of a planned and orderly leadership succession process, Goldberg and Newmont’s board have been engaged in discussions anticipating a CEO succession in early 2019. In October 2018, the company also announced Palmer’s promotion to President and Chief Operating Officer.
To ensure a smooth and successful combination, 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 December quarter of 2019, when Goldberg plans to retire and Palmer will become President and Chief Executive Officer.
The Board of Directors will be proportionally comprised of Newmont and Goldcorp Directors, with Noreen Doyle as Chair and Ian Telfer as Deputy Chair.
Goldcorp’s Vancouver, Canada, office will become Newmont Goldcorp’s North America regional office, while Newmont Goldcorp’s South America regional office will be in Miami, US, the Australia regional office will be in Perth, and the Africa regional office will be in Accra, Ghana. Newmont Goldcorp will be a Delaware corporation with its corporate headquarters in Colorado, US.
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 June quarter, but closing 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.