The mining industry’s largest proposed takeover is moving ahead at a steady pace. U.S. gold mining giant Newmont Mining is moving ahead to finalize it’s bid to take over Canada’s own gold giant Goldcorp (TSE: G), a transaction that’s estimated at around $10 billion and would create the world’s largest gold miner.
While a counter offer from Canada’s Barrick Gold (TSE: ABX) worth almost twice that amount was turned down by Newmont in favor of a joint venture instead, there’s still some newsworthy developments in this area. Today, the company announced that they would provide a special dividend to Goldcorp shareholders in order to encourage them to finalize the merger once and for all. In doing so, Newmont has swayed a number of their top shareholder critics who have previously opposed the deal.
“Newmont Mining Corporation today announced that its Board of Directors declared a one-time special dividend of $0.88 per share of common stock, conditional upon approval of the Goldcorp Inc transaction,” read the press release. “The special dividend delivers value to existing Newmont shareholders with an immediate cash payment for a portion of the synergy potential arising from the Nevada joint venture announced with Barrick Gold Corporation on March 11, 2019.”
“We are pleased to make this special dividend payable to Newmont’s current shareholders in recognition of the potential synergy value of the Nevada joint venture agreement,” added Gary Goldberg, Newmont Mining’s CEO. “We have continued to engage with, and have listened carefully to, our shareholders, and we are pleased that several of our largest shareholders have expressed their support for the combination with Goldcorp.”
Despite what management teams would say, some of Newmont’s shareholders are criticizing this deal. Hedge fund giant Paulson & Co has gone on to contest the deal, saying that it delivers most of its benefits to Goldcorp shareholders given the Canadian company’s poor performance over the years with not as much in return for Newmont.
Portfolio manager Joe Foster at Van Eck – a company that’s also one of Newmont’s biggest shareholders – has instead criticized the ridiculous payouts that would be given to Goldcorp executives for the merger, despite their poor performance over the years. However, both critics of the deal ended up changing their tune on Monday when the special dividend was announced as Newmont’s management won over two of their biggest critics within the company.
“We’ve seen many deals before where companies claim they’re going to create synergies,” Foster said in a phone interview according to Bloomberg. “This is the first time we’ve seen a company actually pay upfront an advanced payment on those synergies.”
In response to the news, Newmont shares increase 1.2 percent in light of today’s announcements, while Goldcorp jumped up 2.7 percent as well.
Newmont Mining Company Profile
Newmont Mining is one of the world’s largest gold producers. In 2018, the company produced 5.1 million attributable ounces of gold and 109 million attributable pounds of copper. North America accounted for 40% of attributable gold production, South America 13%, Australia 30%, and Africa 17%. As of Dec. 31, 2018, Newmont had 65.4 million attributable ounces of proven and probable gold reserves. – Warrior Trading News
