Newcrest on the defensive after $3.5-billion Pretium acquisition unveiled – by Niall McGee (Globe and Mail – November 9, 2021)

The latest big deal to shake up Canada’s gold industry has the acquirer on the defensive for paying a premium, but at least one money manager is salivating at the prospect of an even higher offer.

Australia’s Newcrest Mining Ltd. faced questions from analysts, and a declining stock price, after it unveiled plans late Monday to acquire Pretium Resources Inc. for $3.5-billion. Melbourne-based Newcrest is offering $18.50 in cash, or 0.8084 Newcrest shares, for each Pretium share.

Unlike many big deals over the past few years, Newcrest is paying a sizable premium of 22.5 per cent for Vancouver-based Pretium, owner of the high grade but challenging-to-mine Brucejack gold mine in British Columbia.

Deals that pay no premium have gained in popularity ever since Barrick Gold Corp. bought Randgold Resources Ltd. in 2018 for US$6-billion. As recently as September, Agnico Eagle Mines Ltd. announced a zero-premium acquisition of Kirkland Lake Gold Ltd. for more than US$13-billion. Both deals were warmly welcomed by investors.

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