Newmont makes $4.4bn bids to create gold leader
By FT.com staff in New York
Published: November 14 2001 13:52 | Last Updated: November 15 2001 03:02

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Newmont Mining said on Wednesday it planned to acquire Normandy Mining, Australia's largest gold producer, and Franco-Nevada Mining Corp of Toronto, for a combined US$4.4bn in stock and cash, creating the world's number one gold mining company.

Newmont, North America's largest gold producer, said it would make an offer to buy Normandy for 0.038 shares of Newmont for each Normandy share.

The offer, assuming 90 per cent acceptance, represents A$1.70 a share, or a 21 per cent premium over the current value of a bid for Normandy by the number one producer, AngloGold of South Africa.

Newmont said it would also pay 5 Australian cents a share if its offer was accepted by at least 90 per cent of shareholders.

Newmont said it has offered to buy Franco-Nevada in a stock-for-stock transaction where Franco-Nevada shareholders would receive 0.8 of a Newmont share for each share tendered to the offer.

Newmont Mining was formed out of last year's merger of Newmont and Battle Mountain. Newmont said the acquisitions, if successful, would achieve $70m to $80m in annual savings after tax synergies after the first full-year, increasing to $80m to $90m by the end of the second year.

Wayne Murdy, president of Newmont, said: "Newmont will become one of the best capitalised companies in the gold mining industry, with enhanced strength and flexibility to continue to explore, develop new projects and make strategic investments as opportunities arise."

Robert Champion de Crespigny, Normandy's chairman, said Normandy shareholders were receiving "a superior bid" which the Board endorsed.

"Shareholders will own equity in a liquid, North American company with the financial strength to advance many of our attractive development projects."

Pierre Lassonde, president of Franco-Nevada, said Franco Nevada shareholders would increase their leverage to gold with the Newmont transaction.

Newmont is a largely unhedged gold producer and can reap the benefits of higher gold prices.

"Along with Newmont management, we are optimistic about the future price of gold."

Newmont said it had received board approvals from both companies and recommendations for shareholder support of the bids. The transactions will require regulatory approvals.

If the deals are completed, Newmont will boast 22 mines on five continents; interests in another 8 gold operations, and big positions in "world-class" gold areas in Nevada, Western Australia and Peru.

Mr Murdy will be chairman and chief executive of the combined companies, effective January 1, while Mr Lassonde will be president. Mr De Crespigny will be offered a position on the expanded Newmont board.




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