Gold miner Newmont to buy rival Newcrest
For $17 billion: The move could set off a bidding war for Newcrest, Australia's largest gold mining company
Gabriel Thomas (GT)May 8, 2025
In the largest takeover bid announced this year, two of the world's largest gold mining companies are negotiating a merger to create a global production giant.
U.S.-listed Newmont, the world's largest gold miner by output, has launched a takeover bid for its Australian rival Newcrest, valued at about A$24 billion ($17 billion).
The move could trigger a bidding battle for Newcrest, Australia's largest gold miner. Rivals such as Canada's Barrick Gold and Agnico Eagle are also trying to consolidate the market, analysts say.
Following the news, shares in Newcrest rose 10% to A$24.74, their highest level since May.
According to Dealogic, Newmont's A$24 billion offer for Newcrest would far surpass technology group Xylem's $7.5 billion purchase of water treatment company Evoqua, announced last month, as the highest M&A deal this year.
The implied premium in Newmont's offer over Newcrest's last closing share price is 21%.
According to Tom Palmer, Denver-based Newmont's Australian chief executive, the deal still needs to be approved by Newcrest's board and regulators.
We believe the combination of Newmont and Newcrest will add significant value to our respective shareholders, employees and operating communities," he said.
The merger would reunite the two companies after nearly 25 years apart. Newmont Australia was founded in Melbourne in the 1960s. After merging with BHP's historic gold assets in 1990, Newcrest was spun off.
Four of Australia's five largest gold mines would be under the control of a single company if the historically related companies merged, which would require Australian government approval.
The Australian Financial Review first reported on the negotiations.
With rising costs in the Australian mining industry, production problems in gold and price instability due to dramatically higher interest rates, more and more companies are considering mergers and acquisitions to increase their size.
Investments in safe countries such as Australia and Canada have attracted attention. OZ Minerals, a nickel, copper and gold miner in South Australia, is about to be bought by BHP for $6.4 billion, while Yamana Gold, a gold miner in Canada, is being dismantled after Agnico Eagle and Pan American Silver spent $4.8 billion to buy the company.
The gold industry's largest companies should focus more on Newcrest. Newcrest owns mines in Australia, Canada and Papua New Guinea, and both Newmont and Barrick have been eyeing the company lately. After nearly halving in value between April and September of last year, the company has been targeted again. Sandeep Biswas, the company's longtime CEO, retired in December, but a permanent successor has not yet been named by the company.
Although Newcrest said it had previously rejected an offer as too low, it did not completely rule out talks with its larger rival, which submitted a higher indicative offer on Sunday.
The revised proposal would also include a plan for Newmont to go public on the Australian Stock Exchange, offering 0.38 Newmont shares for each Newcrest share. Newmont shareholders would own 70% of the combined company, while Newcrest would hold 30%.
According to Simon Mawhinney, chief investment officer of Allan Gray, Newcrest's largest shareholder, he would not support a Newmont takeover under the terms outlined.
Newcrest is fairly affordable. There is a possibility of dilution, he noted. He pointed out that the Australian company is well capitalized and that its long-lived gold reserves should be quite valuable: "The merger ratio is too cute by half."
Mitch Ryan, an analyst at Jefferies, said Barrick is said to be interested in a 2018 purchase and that this approach could put other bids out of the way. Although no official signal has been given, he added, "Additional interest from other suitors is possible."
The new offer would be considered, said Newcrest, which is advised by JPMorgan and Gresham Advisory Partners. Lazard, Centerview Partners and Bank of America are advising Newmont.
