Deals

Newmont’s Goldcorp Gamble May Need ‘Drastic Surgery’ to Pay Off

In short and medium term, deal isn’t good for Newmont: analyst
Premium takeover follows recent no-premium deal in gold sector

John Ing of Maison Placements Canada discusses Newmont Mining Corp.’s acquisition of Goldcorp Inc. (Source: Bloomberg)

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By Danielle Bochove, Caleb Mutua, and Marvin G Perez

January 14, 2019 at 5:21 PM UTC

Updated on

January 15, 2019 at 11:00 AM UTC

This article is for subscribers only.

The cost to create the world’s largest gold company: A 17 percent premium for a $10 billion all-shares acquisition that faces some big-time challenges down the line.

Newmont Mining Corp.’s deal for Goldcorp Inc. stands in stark contrast to the recent zero-premium merger between Barrick Gold Corp. and Randgold Resources. The key question: Why? In October, Goldcorp shares fell to their lowest since 2002 after the miner reported lower output and higher costs than expected. Since then the stock improved only marginally before today.