Newmont Mining Corp (NYSE: NEM) said on Monday that it would buy rival producer Goldcorp Inc. (NYSE: GG). The USD 10 Billion all-stock deal would create the world’s largest gold miner. Newmont announced in a press release that combining the two companies will create an unmatched portfolio of operations, projects, exploration opportunities and reserves in the gold mining sector. The agreement will merge the industry leaders into Newmont Goldcorp.
This deal follows another high-profile merger in the mining industry. Barrick Gold Corp (NYSE: ABX) agreed to buy Randgold Resources Ltd in September last year.
Under the terms of the Newmont Goldcorp agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share. That represents a 17% premium based on the companies’ 20-day volume weighted average share prices.
“This combination will create the world’s leading gold business with the best assets, people, prospects and value-creation opportunities,” said Gary Goldberg, Newmont’s Chief Executive Officer. Newmont Goldcorp will be located in favorable mining jurisdictions in the Americas, Australia and Ghana. The new Company anticipates it will offer the highest annual dividend among senior gold producers at USD 56 cents per share.
Following the merger, Gary Goldberg will continue to serve as CEO until the fourth quarter of 2019. Tom Palmer will then become President and Chief Executive Officer.
The Boards of Directors of both companies have unanimously approved the transaction. The deal is expected to close in the second quarter of 2019. The closing of the transaction is subject to both shareholder and regulatory approvals.