Shares of gold miner Newmont (NYSE:NEM) are on the rise today after shareholders of Australian company Newcrest Mining (OTC:NCMGF) approved an approximate $16.8 billion acquisition by Newmont, with 92.6% of the votes cast in favor of the transaction.
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The transaction will consolidate Newmont as the biggest gold producer globally. The approval from Newcrest shareholders follows an earlier approval for the deal by Newmont investors as well as from the Australian government.
With rising operational costs and harder-to-find new deposits, transactions in the sector seem to be the buzzword. Newmont already has mining assets across the Americas, Africa, Australia, and Papua New Guinea. Its acquisition of Newcrest comes at a time when global geopolitical upheavals have sent gold prices soaring by nearly 15% over the past year.
Newmont expects the acquisition to lead to cash improvements of nearly $2 billion and pre-tax annual synergies of about $500 million within the first two years of the deal. Next, the deal is set for approval at a court hearing in Australia on October 17.
Is NEM a Good Stock to Buy?
Overall, the Street has a Moderate Buy consensus rating on Newmont. The average NEM price target of $51.39 implies a substantial 30.4% potential upside.
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