Newmont (NEM) raised its all-stock takeover bid for smaller Australian rival Newcrest Mining (NCMGY), seeking to fortify its position as the world’s largest gold producer. NEM stock fell Tuesday.
Under the revised terms, Newcrest shareholders would receive 0.4 Newmont share for each Newcrest share held. That is up from a previous offer of 0.38, which was unanimously rejected by Newcrest’s board in February.
Newmont is the world’s largest gold producer by market value and ounce production.
The Colorado-based company has a lot riding on its “best and final offer” for Newcrest at AU$29.4 billion ($19.5 billion).
On Tuesday, Newcrest said that it has given Newmont access to its books after the improved offer. Due diligence should be completed within about four weeks, Newmont said.
If successful, the deal would see Newmont’s output nearly double that of its nearest rival Barrick Gold (GOLD), Reuters said.
“This transaction would strengthen our position as the world’s leading gold company by joining two of the sector’s top senior gold producers,” Newmont CEO Tom Palmer said in Tuesday’s news release.
Gold Stocks
Shares of Newmont shed 2.3% to 49.92 on the stock market today. NEM stock has formed a cup base with a 55.51 buy point, the MarketSmith chart shows. Newmont could be working on a new handle.
Newmont stock tumbled in February after the gold miner announced its Newcrest merger bid, also retreating as gold prices pulled back for a few weeks. NEM stock has rallied solidly over the past month as the miner gave upbeat longer-term production guidance, citing increased gold reserves, along with a renewed rally in gold prices and stocks.
NCMGY stock jumped 6.6% to 19.92. Newcrest closed up 1.1% to 18.69 Monday. GOLD stock dipped 0.2% to 19.42. It’s near a 20.29 cup-shaped buy point, but also could be working on a handle.
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