Newcrest Mining Limited has received an amended conditional and non-binding proposal (Revised Proposal) from Newmont Corporation to acquire 100% of Newcrest’s issued shares through a scheme of arrangement.
According to the Revised Proposal, Newcrest shareholders would get 0.400 Newmont shares for each Newcrest share owned.
Furthermore, the Revised Proposal allows Newcrest to pay a franked special dividend of up to US$1.10 per share on or around the date the scheme of arrangement is implemented. The Revised Proposal represents an estimated value of A$32.87 per share to Newcrest shareholders in total.
Following Newcrest’s announcement on February 16, 2023, Newcrest and Newmont inked a non-disclosure and standstill agreement. Newcrest then granted Newmont non-exclusive access to restricted, non-public information to examine whether Newmont could deliver a better bid that adequately reflected Newcrest’s value.
When combined with the franked special dividend, the implied consideration received by Newcrest shareholders under Newmont’s Revised Proposal is a 16.0% increase over Newmont’s initial proposal (0.363x exchange ratio) and represents:
- an implied Newcrest share price of A$32.87 per share;
- an implied equity value of A$29.4 billion and enterprise value of A$32.0 billion for Newcrest;
- 31.1% ownership of the combined group by Newcrest shareholders on implementation;
- a 46.4% premium to Newcrest’s undisturbed closing price of A$22.45 per share on 3 February 2023; and
- a 41.2% premium to Newcrest’s undisturbed 30-day volume weighted average price (VWAP) of A$22.22 per share on 3 February 2023.
In the absence of a competing bid, Newmont has indicated that the Revised bid constitutes its best and final price.
After reviewing the Revised Proposal, Newcrest has agreed to allow Newmont to complete confirmatory due diligence to submit a binding proposal. Due diligence is projected to take about four weeks to complete. During this time, Newcrest will also conduct confirmatory due diligence on Newmont.
The Revised Proposal is subject to several conditions, including:
- satisfactory completion of confirmatory due diligence by Newmont and Newcrest;
- entry into a binding scheme implementation agreement subject to a number of conditions, including regulatory approvals, Newcrest shareholder approval for the scheme of arrangement, and Newmont shareholder approval authorising the issuance of Newmont shares as consideration under the scheme of arrangement; and
- the consensus recommendation of the Newcrest Board that shareholders vote in favour of the Revised Proposal (in the absence of a superior proposal and subject to an independent expert concluding that the Revised Proposal is in the best interests of Newcrest shareholders).
As a condition of the Revised Proposal, Newmont has sought exclusivity throughout the due diligence phase, and Newcrest plans to give exclusivity on reasonable conditions.
However, Newcrest said there is no guarantee that the Revised Proposal would result in a binding offer for consideration by shareholders and that shareholders do not need to take any action at this stage.
