Today, Newmont Mining (NEM) and Goldcorp (GG) announced that they have entered an agreement in which NEM will acquire all of the outstanding shares of Goldcorp in a stock-for-stock transaction valued at $10 billion.
Newmont will acquire each share of Goldcorp in exchange for 0.3280 NEM shares, which represents a premium of 17% based on the companies’ 20-day volume weighted average stock prices.
Sector-leading gold combination
Newmont Goldcorp’s reserves will be among the largest in the gold sector (GDX) (GDXJ). Moreover, the combined entity is targeting $1.0 billion–$1.5 billion in divestitures over the next two years to optimize gold (GLD) production at a sustainable rate. As per the press release, “In addition to providing shareholders the largest gold Reserves per share, Newmont Goldcorp will offer the highest annual dividend among senior gold producers.”
Following Barrick-Randgold merger
This transaction comes on the heels of the merger of Barrick Gold (GOLD) with Randgold Resources, which was completed on January 2, 2019. On September 24, Barrick Gold agreed to acquire Randgold Resources in a share-for-share deal. The merger created a sector-leading gold company, which owns five of the industry’s top ten Tier 1 gold assets. The combined entity has a market cap of ~$23.75 billion. It will also have the largest gold reserves among its senior gold peers (GDX) (NUGT).
You can read Is Barrick Worth a Look after Its Merger with Randgold? for more details about the merger.