By Melanie Burton
MELBOURNE (Reuters) -Newmont Corp laid down a best and final offer for Australia's Newcrest Mining Ltd on Tuesday at A$29.4 billion ($19.5 billion) to close a deal that would extend Newmont's lead as the world's biggest gold producer.
If successful, the deal would lift Newmont's gold output to nearly double its nearest rival Barrick Gold Corp. The merger is set to be the third-largest deal ever involving an Australian company and the third-largest globally in 2023, according to data from Refinitiv and Reuters calculations.
Newcrest said on Tuesday it had given U.S.-based Newmont access to its books following the sweetened all-share bid that has received some support from shareholders.
"I think this offer strikes a better balance. We are positively disposed to the Newcrest-Newmont merger and would intend to remain a shareholder of the combined entity were a transaction to proceed," said Simon Mawhinney, chief investment officer at Newcrest's top shareholder Allan Gray Australia.
Under the revised offer, Newcrest shareholders would receive 0.400 Newmont share for each share held, with an implied value of A$32.87 a share, up from a previous exchange ratio of 0.380 that Newcrest's board unanimously rejected in February.
"This transaction would strengthen our position as the world's leading gold company by joining two of the sector's top senior gold producers and setting the new standard in safe, profitable and responsible mining," Newmont CEO Tom Palmer said in a statement.
Newcrest shares closed 5.16% higher at A$29.74. Newmont's U.S.-listed shares were down about 1.72% in premarket trading, which analysts said reflected some uncertainty over whether the deal would go through.
Newmont's earlier offer had been seen as opportunistic by some investors given it came at a vulnerable time for the company. Newcrest is seeking a replacement for former Chief Executive Officer Sandeep Biswas, who stepped down in December.
"The deal may still be seen as opportunistic by (Newcrest's) board and shareholders given short-term operational issues, an interim CEO, and a perceived lack of market appreciation for long-term project potential," RBC said in a report.
The latest bid is 16% higher than Newmont's initial proposal, and represents around a 46% premium to Newcrest's share price on Feb. 3 before Newmont's first bid was announced.
Newmont is also offering a franked special dividend of up to $1.10 per share and is seeking unanimous board approval to proceed with the binding offer after a due diligence period of around four weeks.
"We always thought there would be another bump coming through. It's probably enough for us," said Andy Forster, senior investment officer at fund manager Argo Investments in Sydney.
Reuters had reported that Newmont was open to raising its offer price for Newcrest.
Barrick and miner Sibanye Stillwater Ltd have told Reuters they are not interested in bidding for Newcrest.
Newcrest's operations include its top-class Cadia asset in Australia, an expanding footprint in North America and Papua New Guinea, and growth potential in copper, highly prized as key to the world's energy transition.
($1 = 1.5049 Australian dollars)
(Reporting by Melanie Burton; Additional reporting by Harish Sridharan and Sameer Manekar in Bengaluru; Editing by Sriraj Kalluvila, Anil D'Silva, Sonali Paul and Christian Schmollinger)