Newmont Mining Corporation (NEM) agreed to acquire Goldcorp Inc. (GG) for $10 billion in an all-stock deal, which is expected to be completed in the second quarter of 2019. Under the terms, Newmont will acquire all outstanding Goldcorp equity at an exchange ratio of 0.3280 of a Newmont share and $0.02 for each Goldcorp share, which will represent a 17% premium based on both companies’ 20-day volume weighted average share prices as of January 11, 2019.

The transaction has been approved by the boards of directors of both companies. Closure of the deal is subject to approval by the shareholders of both companies, regulatory approvals in a number of jurisdictions including the EU and Canada, and other customary conditions.

The combined entity will be named Newmont Goldcorp and will be one of the world’s largest gold producers by output. Newmont shareholders will own approx. 65% of the combined company while Goldcorp shareholders will own 35%.

The majority of Newmont Goldcorp’s reserves and resources, around 75%, will be located in the Americas with the remaining 15% in Australia and 10% in Ghana. Newmont Goldcorp plans to divest $1 billion to $1.5 billion in assets over the next two years, and aims to achieve an annual production target of 6-7 million ounces. In 2017, Newmont produced 5.3 million ounces of gold while Goldcorp produced 2.6 million ounces.

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Gary Goldberg will be the Chief Executive Officer of Newmont Goldcorp and Tom Palmer will be the President and Chief Operating Officer. Mr. Goldberg will lead the company through the acquisition and integration process, which is expected to be completed for the most part in the fourth quarter of 2019, after which he will retire and Mr. Palmer will become President and CEO.

Newmont Goldcorp’s shares will be traded on the New York Stock Exchange under the ticker symbol NEM and are expected to be listed on the Toronto Stock Exchange following the deal closure. Newmont would be entitled to a $350 million break-fee and Goldcorp would be entitled to a $650 million break-fee, depending on the circumstances.

Newmont’s stock was down 4.5% in morning trade on Monday while Goldcorp’s shares were up 11.5%.

 

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