Newmont dangles special dividend if shareholders approve Goldcorp deal
Newmont says the immediate cash payment will represent a portion of the savings from a separate agreement with Barrick Gold
Toronto — Newmont Mining will pay a special dividend of 88 US cents in an effort to soothe unhappy shareholders if they approve its $10bn takeover of Goldcorp, the company said on Monday.
Facing protests from investors who say Goldcorp shareholders benefit too much from the deal, Newmont said the immediate cash payment would represent a portion of the savings from a separate agreement with Barrick Gold.
Newmont's friendly bid to buy Goldcorp to create the world's biggest gold producer preceded the agreement with rival Barrick to create a joint venture combining their operations in Nevada. Newmont offered 0.328 of its shares and 2c for each Goldcorp share.
Top Newmont shareholders including Paulson & Co and Van Eck International Investors said last week the Goldcorp proposal transferred to Goldcorp shareholders too much of $4.7bn in synergies from the Barrick venture. Paulson said last week it would vote against Newmont's acquisition of Goldcorp.
A Paulson spokesperson said the firm was evaluating the announcement.
"We're very pleased with Newmont's decision," Joe Foster, portfolio manager at Van Eck, Newmont's third-biggest shareholder, said. "Companies always claim they're going to create synergies. It's great to see Newmont putting their money where their mouth is and giving us a payout up front."
In an investor presentation earlier in March, Newmont said Goldcorp shareholders would get $600m of the pre-tax synergies from the joint venture with Barrick.
"If one assumes this dividend payment of $469m reflects the after-tax value of the joint venture that would have been previously shared with Goldcorp shareholders, it would appear to be fair," Josh Wolfson, MD of metals and mining at Desjardins Securities, said by e-mail.
Goldcorp shares jumped 3.5% to C$15.02 in morning trade on Monday in Toronto, erasing Friday's 2.9% loss. Newmont climbed 1.9% to a one-month high of $35.09 in New York trading.
Goldcorp said in a separate statement it supported the special dividend.
Also, Goldcorp said proxy advisory firm ISS recommended on Monday that its shareholders support Newmont's takeover offer when they vote on April 4. Newmont shareholders will vote on April 11.