Following Newmont Corp.’s offer to acquire Australia-based Newcrest Mining Ltd., one investor said the proposed deal now faces a number of headwinds.
John Ing, president and chief executive officer at Maison Placements Canada, said in an interview with BNN Bloomberg Monday that the US$17-billion proposal will face two main challenges.
Firstly, Ing said Australia is “not an easy jurisdiction to do a takeover.”
“And the other problem is that it's a premium bid, but there are some major shareholders of Newcrest…an eight per cent shareholder already that has said it's not such a great deal,” Ing said.
“My expectation is this is going to be a long drawn-out affair.”
Newmont confirmed the all-stock proposal Sunday in a news release, which would solidify the U.S. mining company’s position as the largest gold miner in the world.
Tanya Jakusconek, an analyst at the Bank of Nova Scotia, said in a note Monday that the proposal is now being considered by Newcrest’s board and follows a previous offer that was rejected.
The latest offer, however, appears to have some potential for growth, according to Jakusconek.
“While the proposal is non-binding, and may not be consummated, we see this offer as slightly accretive (NAVPS, CFPS, EBITDA/sh) for NEM [Newmont], from a financial perspective,” Jakusconek said in the note.
“For NCM [Newcrest], shareholders would receive a premium and the opportunity to be part of a larger entity.”