Golden Handshake

Image source: 42pixels - Shutterstock

What's going on?

US gold miner Newmont made a top-dollar bid for Australian rival Newcrest over the weekend.

What does this mean?

With names as similar as “Newcrest” and “Newmont”, you might suspect that these two mining firms are cut from the same cloth. And you’d be right: Newmont created Newcrest as its Australian arm in the 1960s, before spinning it off a few decades later. But with mining costs spiking and gold deposits harder to come by, companies are looking to dealmaking for more security and scale. Now Newmont, already the world’s biggest gold miner, is keen to buddy up with its old pal: the firm launched an all-share bid valuing the Aussie firm at $17 billion, 21% more than the company was worth before the bid was announced (tweet this). This move could be huge: as well as creating a global gold powerhouse, it would give the US titan access to Newcrest’s copper – an uber-hot commodity with EVs and renewable energy on the rise.

Why should I care?

Zooming in: Not set in stone.
The move has the makings of 2023’s biggest deal-making blockbuster so far, but there’s still a ways to go. For one, the deal would hand one company 80% of Australia’s biggest gold mines, something the government would have to green-light. And for another, this offer could just spark a bidding war: Newcrest already rejected a lower offer by Newmont, and some analysts reckon rivals Barrick and Agnico Eagle will be sizing the firm up too.

The bigger picture: Diamond in the rough.
Gold has been gleaming bright in recent months, with prices up 15% since November, and there’s a chance the shining streak could last. After all, it looks like economies could fall into a slump this year, forcing central banks to pause or even reverse their hikes. And if that happens while inflation’s still lingering, then gold – the world’s oldest safe haven and inflation hedge – could have a field day.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

And Then I Found A Job

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.