Lihir Gold succumbs to Newcrest's $8.79 billion sweetened merger offer
04 May 2010
Lihir Gold Limited (LGL), Australia's second-largest gold miner, agreed today to a sweetened $8.79 billion takeover offer from rival Newcrest Mining Ltd, to create the fifth largest gold producer in the world.
LGL shareholders will receive one Newcrest share for every 8.43 LGL shares they own and A$0.225 in cash per share, a 6.4 per cent increase on Newcrest's earlier offer made on 1 April 2010.
Melbourne-based Newcrest, had last month offered one share for every nine Lihir shares plus 22.5 cents cash per Lihir share, valuing the whole deal at A$9.2 billion. The LGL board had rejected that offer. (See: Australia's Lihir Gold rejects Newcrest's A$9.2-billion offer)
Based on Newcrest's 3 May closing price of A$32.06, the miner said today that its implied offer price is now A$4.03 per LGL share, valuing LGL at approximately A$9.5 billion.
Lihir directors have unanimously recommended that shareholders vote in favour of the scheme in the absence of a superior proposal but, under the merger implementation agreement signed today, LGL will continue discussions with rival bidders until 8 June and will allow Newcrest to complete due diligence in that period.
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The offer would result in Lihir shareholders owning approximately 35 per cent of the combined company, and sharing in the benefits of the combination.
Brisbane-based Lihir, with a market capitalisation of over A$8 billion, is a major global gold producer with operations in Papua New Guinea (PNG), West Africa and Australia.
The company operates one of the world's largest gold mines and processing facilities on Lihir Island in New Ireland province of Papua New Guinea. Lihir also has operations in Mount Rawdon in Queensland and Côte d'Ivoire in West Africa.
With three producing operations, LGL has more than 30 million ounces in combined gold reserves.
Melbourne-based Newcrest is the country's largest gold producer and one of the world's top 10 gold mining companies by production, reserves and market capitalisation.
It is among the top 20 companies listed on the Australian Stock Exchange by market capitalisation with a portfolio of low-cost, long-life operating mines, a strong pipeline of growth projects and highly prospective brown and greenfield exploration projects.