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Will Newmont Investors Approve GG Merger after Special Dividend?

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Mar. 25 2019, Published 2:56 p.m. ET

Newmont’s special dividend payment

Today, Newmont Mining (NEM) announced a conditional special dividend to shareholders if its proposed merger with Goldcorp (GG) goes through. This one-time special dividend of $0.88 per share is contingent on Newmont and Goldcorp shareholders’ approval of the Newmont-Goldcorp merger.

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Newmont-Goldcorp merger

Newmont Mining agreed to acquire Goldcorp on January 14 by paying a 17% premium to acquire the stock. Gold miners (GDX)(NUGT) haven’t kept up with broader equities (SPY)(IVV) or gold (GLD) over the last few years. As they loaded up on debt and made poor investment decisions at the peak of the cycle, they lost favor with institutional investors. Now, they’re under pressure to create value for shareholders, which is again driving merger and acquisitions in the gold mining space. Check out Could the Newmont-Goldcorp Merger Form ‘The Go-To Gold Equity’? to learn more.

Obstacles to the merger

On February 25, Barrick Gold (GOLD) put in an unsolicited bid to acquire Newmont Mining, which didn’t offer a premium to its stock price. On March 4, Newmont Mining rejected the bid. Barrick agreed to let go of its merger ambitions with NEM given the creation of a 61.5%–38.5% joint venture with their combined Nevada operations.

The obstacles for the NEM-GG merger, however, don’t seem to be resolved yet. As we discussed in John Paulson Opposes the Newmont-Goldcorp Merger, on March 21, Paulson & Co. said it doesn’t favor Newmont Mining’s $10 billion merger with Goldcorp as it thinks the $1.5 billion premium to Goldcorp shareholders isn’t justified, considering the company’s poor operating performance. The fund also thinks most of the gains from the Nevada joint venture will go to Goldcorp shareholders.

NEM’s other large shareholder, VanEck’s, Joe Foster also voiced concerns about the Newmont-Goldcorp merger.

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