Everyone is involved with negotiation and for the average mythical person the biggest negotiations they will have are their house and car purchase. The buyer sees something they want, they make a bid and the seller decides to say no or yes. If they say no, the buyer can walk away for a different alternative or offer more money.
In the world of corporate mergers, everyone wants more money. In an article from Reuters, gold prices have risen which means the large low-cost producers have extra money on their balance sheets. If a company has extra money, they can either give it to their shareholders, buy back their own stock or do a merger. In the case of Newmont Corp, they wanted to do a merger of Newcrest Mining. The cost is $26.3 billion and the deal would be the 3rd largest deal for an Australian company and the 3rd largest deal of 2023 according to data from Refinitiv.
Under the revised offer, Newcrest shareholders would receive 0.4 Newmont share for each share held up from 0.38 that the Newcrest Board said was not enough, offer us more or go away. Newcrest’s largest shareholder is Allan Gray Australia and chief investment officer Simon Mawhinney said he will roll his shares into Newmont which is a positive sign the merger will go ahead.
Linking to dividend paying stocks, part of the history of every company is mergers and acquisitions. and generally, if a company offers top dollar they will win, but if the earnings power of the company is cyclical, the trick is the successful integration of the companies. Mergers happen for a great deal of reasons and if you own stocks invariably one or more will be wanted by another company.
There are more questions than answers, till the next time – to raising questions.