The mining industry is poised for a momentous shift as Newmont Corporation, a colossal player in the sector, stands on the brink of acquiring Newcrest Mining Limited. A proposal that has been carefully sculpted since its announcement earlier this year is now at a critical juncture, awaiting shareholders’ consensus.Â
Given the magnitude and implications of such a merger, every step in the process, every opinion, and every advisory becomes vital for the stakeholders involved.
In this context, recent developments have set the stage for a decisive turn. Notably, independent proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. (Glass Lewis) have put forth their recommendations regarding the proposed acquisition.
These endorsements and the subsequent reactions are indicative of the broader sentiment surrounding this landmark deal.
ISS and Glass Lewis Endorsement: A Significant Boost
Prominent advisory firms, ISS and Glass Lewis, have been unequivocal in their stance, urging Newmont shareholders to vote “FOR” each of the Company’s resolutions concerning the acquisition of Newcrest.
This endorsement comes in anticipation of the pivotal special meeting of stockholders, scheduled virtually for Wednesday, October 11, 2023, 8:00 a.m. Mountain Daylight Time.
Newmont’s top brass has received this recommendation positively. Tom Palmer, Newmont’s President and Chief Executive Officer, expressed his optimism, emphasizing the scale and potential of the combined entity. He mentioned:
“Once complete, the joint venture will be a standout in the gold and copper mining investments. Combining forces with Newcrest means a world-class ensemble of gold and copper assets. This consolidation will represent a significant chunk of the globe’s foremost gold mines.”
Envisioning the Combined Force: Opportunities and Synergies
Earlier in May, Newmont had made public its definitive agreement over Newcrest’s acquisition. The envisioned amalgamation paints a promising picture: a portfolio laden with the highest concentration of top-tier operations, predominantly in mining-friendly, low-risk jurisdictions.
A striking feature of this merger would be its substantial production profile anchored by 10 long-living, cost-effective top-tier endeavors, with a significant portion of copper production sourced mainly from Australia and Canada.
Moreover, the fiscal side of the merger also presents an encouraging scenario. The consolidated entity eyes an annual pre-tax synergy of approximately $500 million. This target is set for realization within a couple of years post-acquisition.
In addition, an ambitious goal of sourcing at least $2 billion through portfolio optimization is also on the cards during the same period.
As of now, both Newmont and Newcrest are gearing up for the transaction’s culmination, eyeing a closure in this year’s final quarter. This, of course, is contingent upon meeting customary closing benchmarks and securing necessary regulatory nods.
