Newmont Mining (NEM) has announced the acquisition of fellow senior producer Goldcorp (GG), which would form the largest single gold miner in the world. Combined 2017 production would have totaled 7.9 million ounces, excluding any divestments. Under the announced terms of the deal, Goldcorp shareholders will receive 0.3280 Newmont share and $0.02 in cash for each Goldcorp share they own, which represents a 17% premium on each company’s 20-day volume-weighted average price before the announcement.
Strategically, the deal makes some sense. The pro forma company will maintain an Americas-focused footprint, which helps maintain arguably lower geopolitical risk. In addition, Newmont has shown some recent operational successes with acquired assets, so it may be able to add better performance to the struggling Goldcorp.
Kristoffer Inton does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.