Newmont Boosts Its Offer to Buy Newcrest to $19.5B

Newmont (NEM) sweetened its offer to buy Australia's Newcrest Mining in what would be the biggest acquisition ever in the gold mining industry.

The new proposal of $19.5 billion came after Newcrest rejected Newmont's previous $17 billion bid in February. Under what Newmont calls its "best and final" offer absent a superior one, Newcrest investors would hold a 31% stake in the combined company.

Newmont CEO Tom Palmer said that mining companies are "entering a new era" in which they must hold themselves to a higher standard of sustainability and long-term value creation. He added that this transaction would make Newmont "well-positioned to generate strong, stable, and lasting returns with best-in-class sustainability performance for decades to come."

Adding Copper

Newmont pointed out that, along with boosting its gold portfolio, acquiring Newcrest would increase its annual copper production and add almost 50 billion pounds of copper reserves and resources.  

Newcrest said that it has agreed to give Newmont the opportunity to conduct confirmatory due diligence to enable it to put forward a binding proposal. It indicated that should take about a month. 

Newmont is already the world's largest gold mining company by market capitalization at $40 billion, while Newcrest is valued at about $18 billion. Shares of Newmont fell 2% on April 11 but are up 5% this year.