Newcrest Mining is the largest gold miner in Australia. Newmont’s offer values the company at $17 billion. This deal would see holders of Newcrest Mining stock receive 0.38 shares of NEM stock for each share they own.
To put this deal in perspective, shares of NEM stock were trading at about $50 per share when markets closed on Friday. At the same time, shares of Newcrest Mining stock were trading for about $15 each.
It’s also worth noting that this is the second offer Newmont has made for Newcrest Mining. The prior offer, which was 0.363 shares of NEM stock for each share of Newcrest stock, was rejected. Investors will also keep in mind that some are speculating today’s news could result in a bidding war for Newcrest Mining.
Logic Behind the Deal
Tom Palmer, President and CEO of Newmont, said the following about the company’s offer for Newcrest Mining:
“We believe a combination of Newmont and Newcrest presents a powerful value proposition to our respective shareholders, workforce and the communities in which we operate […] The proposed transaction would join industry-leading portfolios of assets and projects to create long-term value across the combined global business, and we welcome the consideration of Newcrest’s Board of Directors.”
NEM stock is down 4.1% as of Monday morning.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.