It is the mystery of the two cents. When Newmont Mining Corp. said on Monday it will buy Goldcorp Inc. for about $10-billion, swapping its stock for Goldcorp’s, it said it would add 2 US cents per share in cash to the transaction. The tiny little sweetener will cost Newmont just US$17-million.
Why even bother? Robert Willens, a long-time U.S. securities analyst who specializes in matters of taxation, seems to have the answer. Newmont is creating a sizable but little-understood tax benefit for Goldcorp Inc.’s U.S. shareholders that effectively makes its offer more valuable than it appears.
The companies have not addressed the matter. Newmont declined to comment for this story and Goldcorp did not respond to a request. But Mr. Willens told his clients on Tuesday that the structure of the deal makes it taxable for Goldcorp’s U.S. and Canadian shareholders. Usually, companies do everything to avoid that. Continue Reading →