Closing a $26bn acquisition
Recently, King & Wood Mallesons advised Newmont Corporation on the completion of its acquisition of Newcrest Mining Limited, in what the global firm called “Australia’s biggest M&A deal of 2023”. Here, the deal’s lead partners reflect on the completion of the acquisition and where the country’s M&A market is at – particularly for mining.
Earlier this month, the “landmark” acquisition of Newcrest by Newmont (one of the world’s largest gold mining companies) for $26 billion and by scheme of arrangement, marked the completion of what KWM called the biggest merger and acquisition (M&A) deal this year in Australia.
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Newmont’s acquisition of Newcrest, the firm noted in a statement at the time, marks the return of Newmont to the ASX – it now holds a foreign exempt listing in Australia, with Newmont CHESS Depositary Interests (CDIs) trading on the ASX, in addition to its primary listing on the New York Stock Exchange, and a total market capitalisation of over $65 billion. Moreover, KWM went on, Newmont’s admission to the Papua New Guinea Stock Exchange is the first-ever listing of PETS Depository Interests.
At the time, KWM lead partners Will Heath, Scott Langford, and Antonella Pacitti noted that the transaction “sets the tone for some exciting dealmaking activity in the metals and mining sector, including gold”.
State of M&A in Australia
When asked by Lawyers Weekly what the finalisation of the deal says about the state of M&A in the Australian market, Mr Heath reflected that the acquisition is “very much consistent” with a thriving M&A environment in mining and metals and ongoing consolidation in the gold sector.
“M&A in other sectors remains a bit more stop-start. Deals are taking longer to do with regulators and shareholders taking more assertive positions,” he explained.
“More difficult deals require bespoke structuring and balancing of a range of issues, and we were delighted to help Newmont achieve a number of firsts, including a secondary CDI listing on ASX coupled with a PDI listing on PNGX (the first of its kind).”
Moreover, Mr Langford said in support, mining M&A “remains very strong” in Australia across a range of metals, including gold and lithium.
“We have tier 1 assets, and there are good opportunities for domestic and international acquirers who are looking to grow their asset portfolios. We cannot be complacent, however,” he noted.
“There are headwinds for investors, including regulatory uncertainty and delay on mining projects, as well as increased activism. Australian governments and regulators need to remain supportive of the metals and mining industry to attract and retain investment, including through M&A,” Mr Langford espoused.
“The recent acquisitions of Oz Minerals by BHP, and now Newcrest by Newmont, where KWM in each case represented the acquirer, are nevertheless testament to the ongoing attraction of high-quality complementary assets in a stable jurisdiction with low sovereign risk.”
Challenges and best practice in completing acquisitions
When undertaking such expensive acquisitions, Ms Pacitti detailed, there are always challenges in reconciling the requirements of different legal regimes, including the disclosure expectations and timing ask – these are heightened, she said, when both bidder and target are listed entities.
“We do a lot of cross-border M&A work, which provides ready muscle memory and existing neural pathways (among the deal team and the broader KWM firm) to allow focus on the novel aspects of the deal and an ability to clearly pursue Newmont’s strategic objectives.”
“We brought together a cross-practice team within KWM, allowing us to respond across various work streams in parallel and in a coordinated way – making sure key team members stayed across all workstreams, providing our client and their other advisers with easy access to what they needed when they needed it (and across time zones!). Newmont is a class act as an organisation and in dealmaking, which made our job as advisers that much easier, too,” she recalled.
On the topic of what will constitute best practice for M&A teams moving forward if they are to best support clients in closing such deals, in the context of the current economic climate, the lead partners noted that three things are apparent.
“First, you need a team that knows the specific sector and client and can identify the sector-specific and niche regulatory issues that may arise on an M&A deal. For our Newmont–Newcrest deal, Scott led our team on all mining matters and brought over three decades of mining sector experience in the relevant countries involved in this transaction, including Australia, PNG, and North America. It helps to know the client really well too, and our relationship with Newmont also goes back to the early ’90s,” outlined Mr Heath, Mr Langford, and Ms Pacitti.
“Second, these large and complex deals require a deep bench and intense collaboration. Antonella and Will led a large transactional team that ran with negotiations, transaction documents, disclosure documents and transaction planning for almost the entire year, and juggling across Denver, New York, London, Perth, and Sydney/Melbourne time zones,” the trio outlined.
“And third, teams need to have specialist leaders in the areas that impact transaction certainty and key deal terms.”
The KWM team on this matter was led by Mr Heath, Mr Langford, and Ms Pacitti, who were supported by fellow partners Simon Cooke, Adrian Perkins, Malcolm Brennan, Ruth Rosedale, and Greg Protektor, as well as senior associate Jacob Carmody, consultant Jennifer Bell, and solicitors Adam Caldwell and Jessica Zuiderwijk.