Big M&A is tough to pull off and even harder to work for shareholders. Only time can tell if Newmont can get value from its $32b acquisition of Newcrest Mining.
$32 billion including debt is a lot of money, even for a scrip-based deal, and Australia’s second-biggest ever MPerhaps Newmont boss Tom Palmer, an Australian, will make it work; perhaps he won’t. No one can know.
Its shares have underperformed its big global peers – most notably Newmont and Barrick Gold – across three and five years, and Newcrest is now muddling along under an interim CEO who never got the clear air to inspire investors.Newmont read the tea leaves and turned up with an opportunistic bid about three months ago. The two companies’ portfolios line up nicely next to each other and there’s plenty of industrial logic to create the clear No.1 listed gold producer globally.
For Newmont, the industrial logic was so compelling and the timing so opportunistic that it felt it could afford to pay up. It would’ve known that going in via the front door was the only real viable option; cross-border hostile scrip deals are almost possible.
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