Newcrest Mining Enters Exclusivity Period With Newmont

It appears that Newcrest Mining (TSX: NCM) was enticed by the final offered made by Newmont Corp (NYSE: NEM) earlier this week. The two parties have reportedly entered into an exclusivity deed related to the proposed acquisition.

The exclusivity deed will see Newcrest grant exclusivity to Newmont until May 12 so as to enable confirmatory due diligence to be conducted in relation to the proposed transaction. Under the terms of the deal, Newcrest is not able to directly or indirectly solicit a competing proposal, participate in negotiations are discussions that would reasonably lead to a competing proposal, and must notify Newmont of any approach or proposal within two business days, although they would not be required to reveal whom the competing party is.

The requirements have been summarized as “No shop,” “No talk,” “No Due Diligence,” and “Notification Obligation.”

The arrangement follows Newmont making what it referred to as its best and final offer for Newcrest, offering to acquire the firm for 0.4 Newmont shares per share of Newcrest. Newcrest would also be permitted to issue a dividend of up to $1.10 per share prior to the consummation of the transaction. The proposed exchange rate worked out to A$32.87 per share of Newcrest at the time the offer was made, or about US$19.5 billion.

The bid followed an offer of 0.38 Newmont shares per Newcrest share, made back in February.

The transaction, if completed, would be the third largest deal ever involving an Australian firm, and would result in Newmont having four times the production scale as its nearest competitor, Barrick Gold.

Newcrest Mining last traded at $27.23 on the TSX.

Information for this briefing was found via Sedar, Reuters, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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