Newmont's Buyout Offer Cleared By Goldcorp's Shareholders
Zacks Investment Research | Apr 07, 2019 09:21PM ET
Newmont Mining Corporation’s (NYSE:NEM) proposed merger with Goldcorp Inc (NYSE:GG) has been approved by the shareholders of the latter. Goldcorp’s shareholders have voted in favor of the plan of arrangement for the proposed merger at a special meeting held on Apr 4.
Goldcorp’s move was welcomed by Newmont as the companies are a step closer to form a leading gold business in terms of assets, prospects and resources. Notably, the transaction was approved by more than 97% of the votes that were cast by Goldcorp's shareholders either in person or by proxy at the meeting.
Newmont will arrange a special shareholder meeting on Apr 11, 2019, where its shareholders will be asked to vote on the issuance of Newmont common shares related to the proposed transaction with Goldcorp. The companies expect the deal to close in second-quarter 2019, which is subject to approval by Newmont’s shareholders along with satisfaction of customary closing conditions and regulatory approvals.
Post merger, the newly-formed entity will be known as Newmont Goldcorp. It is expected to deliver a total of $365 million in annual pre-tax synergies, supply chain efficiencies and full-potential improvements. This represents the opportunity to create $4.4 billion pre-tax net present value.
Moreover, the company will be able to leverage its combined scale, targeting a profitable gold production in the range of 6-7 million ounces over the long term. The deal offers an investment-grade balance sheet and financial flexibility to pursue promising projects that are capable of generating a targeted IRR of minimum 15%. It will have the largest gold reserves and resources in the industry, including on a per share basis.
Newmont’s shares have lost 5.4% in the past year, against the Zacks Investment Research
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