Newcrest and Lihir enter into merger implementation agreement

Lihir shareholders will receive one Newcrest share for every 8.43 Lihir shares they own, plus A$0.225 cash per share, less any interim dividend declared or paid by Lihir for the half year ending June 30th, 2010.
Based on Newcrest’s closing price of A$32.06 on May 3rd, the implied offer price from Newcrest is now A$4.03 per Lihir share, valuing Lihir at approximately A$9.5 billion. This represents a 6.4 per cent improvement on Newcrest’s previous proposal to acquire Lihir as announced on April 1st, 2010.
A limited mix and match structure will also apply, giving Lihir shareholders greater flexibility in the offer consideration.
The directors of Lihir unanimously recommended that shareholders vote in favour of the scheme in the absence of a superior proposal and subject to an independent expert’s opinion that the scheme is in the best interests of Lihir shareholders.
Newcrest chairman, Don Mercer, said the combination of Newcrest and Lihir has compelling strategic logic and merit, which was recognised overwhelmingly by shareholders of both companies.
“The combined organisation will be Asia-Pacific’s leading gold producer, with a standout portfolio of long-life, high margin, tier one gold assets,” he said.
Newcrest managing director and CEO, Ian Smith, said the combined portfolio of assets was unmatched in the global industry providing an outstanding platform to deliver superior returns to shareholders and offering significant opportunities for employees and other stakeholders.
“The portfolio of high quality operating mines and exciting growth opportunities will deliver long term, sustainable production growth within the lowest cost quartile of the global industry for at least the next 30 years,” said Smith.
Lihir Chairman, Ross Garnaut, said, “The Lihir Board had recognised from the outset the highly complementary nature of Newcrest and Lihir, and the strong strategic logic in combining the two organisations.
“We are therefore pleased to have secured an improved financial proposal that we can recommend to our shareholders.
“Our shareholders will receive a highly attractive premium and, by receiving Newcrest shares, will participate in the benefits created by the combination of the two companies,” said Dr Garnaut.
Under the MIA signed on May 4th Lihir retains the ability to continue existing discussions with third parties until June 8th in connection with any competing control transaction for Lihir, with no solicitation of further parties.
It is anticipated that Lihir shareholders will receive scheme documents in late June and will vote on the scheme in late July, with completion of the transaction expected in August 2010.