Gold Miner Newmont Finalizes $19.5 Billion Acquisition Deal With Newcrest

American gold giant Newmont has agreed to acquire its Australian rival Newcrest Mining in a $19.5 billion deal, the companies announced Monday after weeks of negotiations.

The deal, still subject to approval from regulators and shareholders of both companies, would be the largest-ever M&A deal in the gold-mining industry, and one of the world's largest buyouts so far this year.

The acquisition would intensify Newmont's gold output to nearly double another rival, Barrick Gold Corp, to become the biggest U.S. gold and copper producer by market capitalization, according to Bloomberg. It would also place four of the five largest gold mines in Australia under the control of one American company.

With this, Newmont will have gold assets in North and South America, Africa, Australia and Papua New Guinea, while extending its copper exposure to make a footfall in the clean energy industry, the Financial Times reported.

Once the deal is closed, Denver-based Newmont said it would have about 8 million ounces of total combined annual gold production, with more than 5 million gold ounces from 10 long-life and low-cost mines. The miner confirmed it would have combined annual copper production of approximately 350 million pounds from Australia and Canada.

"It (the takeover) creates an industry-leading portfolio with a multi-decade gold and copper production profile in the world's most favorable mining jurisdictions," Newmont chief executive officer Tom Palmer said. "Leveraging our experience from the acquisition of Goldcorp four years ago, we are positioned to deliver an estimated $500 million in annual synergies and an estimated $2 billion in incremental cash flow from portfolio optimization opportunities."

Gold producers have been attempting to make bargains as the industry struggles to make prominent discoveries of the precious metal. Stagnating production, harder-to-mine deposits and surging costs are some of the challenges prompting more and more mergers and acquisitions, with the aim of boosting mining and enhancing overall efficiency in the industry. As a result, the mining sector is witnessing increasing dealmaking activity in 2023, at a time when rising inflation has left many companies flooded with cash but lack of future production.

The deal between Newmont and its Australian rival Newcrest also brings to light an ongoing battle for control among gold miners for products necessary for producing electric vehicles and renewable-energy infrastructure, prominently copper. Newcrest generates around a quarter of its revenue from copper. With Newmont facing stagnation in gold mining, the company is seeking more of the energy-transition metal in its portfolio.

"This transaction will combine two of the world's leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline," Newcrest's chairman, Peter Tomsett, said in the statement. "The combined group will set a new benchmark in gold production while benefiting from a material and growing exposure to copper and a market-leading position in safety and sustainability."

Newcrest is set to pay a franked special pre-completion dividend of up to $1.10 per share. The company said it had previously agreed to extend Newmont's "due-diligence rights" to May 18 after a prior deadline lapsed.

Newmont had first approached the Melbourne-based firm in February with a $17 billion non-binding bid, but it was rejected by Newcrest's board. The American company then proposed another deal with $19.5 billion in April, describing it as the best and final offer, which was finally approved by Newcrest chief executive officer Sherry Duhe.