Top gold producer Newmont Corp (NEM.N) said it had made a $16.9 billion offer for Australian peer Newcrest Mining Ltd (NCM.AX) to build a global gold behemoth, although investors and analysts said it undervalued the target amid a leadership change.
Newcrest is seeking a new boss, with previous chief executive Sandeep Biswas having stepped down in December, while global interest rates are expected to peak this year and turn down, polishing the outlook for gold prices.
The Australian gold miner said that it was considering the proposal in a filing that was a response to media speculation over the weekend.
The initial feedback from shareholders is that they want a higher price, according to a person familiar with Newcrest’s deliberations.
“A good litmus test for a reasonably-priced deal is one where both seller and buyer feel somewhat aggrieved by selling out too low or by paying too much,” said Simon Mawhinney, chief investment officer at Allan Gray, Newcrest’s largest shareholder with a 7.36% stake. “It’s not clear to me that this kind of symmetry exists with these deal terms.”
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