In today’s M&A news, Northern Star Resources Ltd. has agreed to buy Saracen Mineral Holdings Ltd, which will make them a top 10 global gold producer with potential market valuation of around USD 11.5 billion (A$16 billion). Gold prices have been surging throughout 2020 and this proposed merger will lead to a gold major with three large-scale production centres in Kalgoorlie and Yandal in Western Australia as well as in Norther America.
The past few years have seen a huge amount of deal-making in the gold sector, including 2019’s Newmont Corp.’s merger with Goldcorp Inc. In 2019, sector deals amounted to about $26 billion, according to data compiled by Bloomberg, while 2020 has been decidedly lower so far, amounting to only around $9.8 billion either completed or agreed upon so far.
The proposed merger will put Northern Star’s Bill Beament as the chair of the new company, while Saracen’s Raleigh Finlayson will be managing director. Stuart Tonkin (Northern Star) will be Chief Executive and Morgan Ball (Saracen) will continue as Chief Financial Officer.
About the merger, Finlayson has said “The benefits which will flow to Saracen shareholders from this merger are significant. This is one of the most logical and strategic merger and acquisition (M&A) transactions the mining industry has seen. The savings, synergies and growth opportunities it will generate make the transaction extremely compelling. In short, it is a unique opportunity for Saracen shareholders unlikely to be replicated via any other avenue.”
Bill Beament also released a statement regarding the proposed merger, with a focus on shareholder value, “Northern Star has only ever pursued growth when it will create value for shareholders. This is significant value-creating M&A. Our position as joint venture partners as Kalgoorlie Consolidated Gold Mines (KCGM), the close proximity of the majority of the combined company’s assets, and a host of other synergies makes this a unique opportunity exclusive to Saracen and Northern Star shareholders.”
The proposed deal means that Northern Star will acquire 100% of the shares in Saracen, with Saracen shareholders receiving 0.37 Northern Star shares for each share they currently hold. Northern Star shareholders would own 64% of the combined entity and Saracen shareholders, the remaining 36%.
Hearings on the merger will take place this coming December, with a date of implementation set for February of next year.