Newmont Mining Acquires Goldcorp In Stock Deal Worth $10B

Newmont Mining (NEM) and Goldcorp (GG) announced they have entered into a definitive agreement in which Newmont will acquire all of the outstanding common shares of Goldcorp in a stock-for-stock transaction valued at $10B. Under the terms of the agreement, Newmont will acquire each Goldcorp share for 0.3280 of a Newmont share, which represents a 17% premium based on the companies' 20-day volume weighted average share prices.

Newmont and Goldcorp shareholders will own approximately 65% and 35% of the combined entity, respectively. Under certain circumstances, Newmont would be entitled to a $350M break-fee and Goldcorp would be entitled to a $650M break-fee. A "targeted sustainable" annual dividend of 56c per share is expected. The boards of both companies have unanimously approved the transaction.

The transaction is expected to close in the second quarter of 2019. Closing of the transaction is subject to approval by the shareholders of both companies; regulatory approvals in a number of jurisdictions including the European Union, Canada, South Korea and Mexico; and other customary closing conditions.

Newmont Goldcorp's management team will be appointed on a "best talent" basis, with Gary Goldberg as CEO and Tom Palmer as President and COO, the companies said. They noted, "Newmont Goldcorp's Reserves and Resources will represent the largest in the gold sector and will be located in favorable mining jurisdictions in the Americas, Australia and Ghana, representing approximately 75 percent, 15 percent and 10 percent, respectively. Newmont Goldcorp will also prioritize project development by returns and risk, while targeting $1.0 to 1.5 billion in divestitures over the next two years to optimize gold production at a sustainable, steady-state level of six to seven million ounces annually. Supported by stable, profitable long-term production and an investment-grade balance sheet, Newmont Goldcorp will generate robust free cash flow and have the financial flexibility to fund project development and exploration in the decades ahead." 

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