From Breakingviews - Gold miner’s mega $20 bln deal is not quite over
. The latest $19.5 billion offer looks shinier but still faces some challenges.
Under the revised proposal, Newcrest shareholders will receive 0.4 of a Newmont share for each one they hold, plus up to $1.10 via a franked special dividend. In total, that implies a value of A$32.87 per share – a 46% premium to Newcrest’s undisturbed price in February, when the company disclosed the U.S. group’s earlier advances. Newmont says the latest improved offer is “best and final”.
Newcrest shares closed nearly 10% below the offer price on Tuesday. That’s odd: the prospective buyer is valuing the enterprise at A$32 billion , or just over 10 times Newcrest’s forecast EBITDA for its next fiscal year, according to Breakingviews calculations. Newmont itself only trades around 8 times.
The process may take a while, however. There’s four weeks of due diligence before Newmont makes a binding offer acceptable to the Newcrest board. Newcrest shareholders, who will own 31% of the merged company, also need to approve the deal. The cross-border structure of the combined entity will need to be ironed out too. And anyone who recalls Barrick Gold’s
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