Newmont Deal Faces Opposition -- WSJ

By Jacquie McNish 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 22, 2019).

Paulson & Co. said Thursday it opposes Newmont Mining Corp.'s $10 billion merger with Goldcorp Inc. because it would transfer away significant gains from a recently announced Nevada joint venture.

"Under the current terms we are unable to support the transaction," the hedge-fund firm wrote Newmont Chief Executive Gary Goldberg in a letter, which The Wall Street Journal first reported.

The firm, founded by John Paulson, said in its letter that it owns 14.2 million shares, which would rank it as one of Newmont's largest shareholders. It is unclear when Paulson acquired its stake.

A spokesman for Newmont said the company is evaluating Paulson's letter.

Newmont announced in January the all-stock merger agreement, which would pay shareholders of Canada's Goldcorp a 17% premium and create the world's largest gold producer.

Barrick Gold Corp., currently the leading gold producer and a longtime Newmont suitor, responded to the deal by threatening a possible hostile bid for its Colorado rival. Instead, Newmont and Barrick announced last week a less ambitious agreement to combine their Nevada gold-mining operations. The two companies estimate the joint venture, to be operated by Barrick, would yield nearly $5 billion in cost cuts and production gains.

Paulson estimated Newmont shareholders would lose about 35% of the planned Nevada gains to Goldcorp shareholders under the current merger agreement. The hedge fund said the 17% premium Newmont is offering Goldcorp shareholders and its potential gains from Nevada are "unjustified" given Goldcorp's record of "poor performance."

Goldcorp's share price had fallen about 75% from its 2011 peak before the merger pact was announced in January. The planned deal has met resistance from other Newmont shareholders and financial analysts.

Paulson said it would support the merger if the deal eliminated the premium being paid. That would require dropping the agreed-upon exchange ratio to 0.254 Newmont share paid for each share of Goldcorp from the current rate of 0.328.

Newmont and Goldcorp shareholders are set to vote on the proposed combination next month. Newmont has agreed to pay Goldcorp a $650 million breakup fee if the merger fails. But Paulson said in its letter that the fee isn't required if Newmont shareholders reject the deal.

A Goldcorp spokeswoman wasn't immediately available for comment.

Write to Jacquie McNish at [e-mail]

(END) Dow Jones Newswires

March 22, 2019 02:47 ET (06:47 GMT)

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