Goldcorp Shareholders Vote Overwhelmingly in Favour of the Newmont Merger


Goldcorp’s [stock_market_widget type="inline" template="generic" color="default" assets="G.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] merger with Newmont Mining [stock_market_widget type="inline" template="generic" color="default" assets="NEM" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has moved one step closer to completion after the former’s shareholders voted overwhelmingly in favour of the deal.

It has emerged that 97% of Goldcorp’s shareholders have given the Newmont merger a thumbs up in a special vote held April 4. Goldcorp’s shareholders stand to get 0.328 of a share of Newmont, as well as two cents in cash for each share of Goldcorp they hold.

On April 11, Newmont shareholders will conduct a special vote to decide if they want to bless the biggest merger in the history of gold miners.

Newmont CEO Gary Goldberg said in a statement: “We appreciate Goldcorp shareholders’ vote of confidence, which moves us one step closer to creating the world’s leading gold business as measured by assets, prospects and people.”

The next and probably the final hurdle for the deal is set for April 11, when Newmont shareholders will conduct a special vote to decide if they want to bless the biggest merger in the history of gold miners. The good part is that the deal should clear that hurdle thanks to Newmont’s recent move of appeasing the disgruntled investors with a special dividend.

Certain Newmont investors were worried that the company is paying too much for Goldcorp. The concerns amplified after Newmont struck a deal with Barrick Gold in Nevada to operate a joint venture that would deliver massive synergies for the two companies. Prominent Newmont investors claimed that Goldcorp shareholders would enjoy undue benefits of the Barrick JV.

Also, both Newmont and Goldcorp investors were concerned with the payout the latter’s chairman, Ian Telfer, was getting. Telfer’s retirement allowance was bumped to $12 million from $4.5 million earlier, and he also declined the job of serving on the board of the combined company as a deputy chairman.

However, Newmont has addressed those concerns with a one-time special dividend of $0.88 per share that will cost it around $470 million once the deal is approved. Newmont shareholders have been receptive to the special dividend. Investors such as Paulson and Co. and Van Eck International Investors now believe that the company is passing on a generous portion of the synergies from the proposed JV with Barrick to investors up front.

Earlier, Paulson believed that Newmont should cut its valuation of Goldcorp to the tune of 23% from the original deal size of $10 billion.

As a result, the deal should close for good when Newmont holds its special vote in a week’s time. Once that happens, the Newmont-Goldcorp merger will give birth to the world’s largest gold miner. Also, the deal is expected to create annual pre-tax synergy to the tune of $365 million.

What’s more, the new company will deliver annual production in the range of 6 million to 7 million ounces for the next 10 years, which exceeds Barrick Gold’s 2019 production estimate of 5.1 million to 5.6 million ounces.

The overwhelming response of Goldcorp investors in favour of the deal sent the stock higher after the announcement was made. The good part is that the combined company should deliver more upside in the long run as gold prices have been rising and gold supply is expected to remain under pressure on account of a decline in discoveries.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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