The all-stock merger is expected to create a top-10 global gold miner with $11.4bn market capitalisation
Northern Star Resources has agreed to acquire rival Australian gold miner Saracen Mineral in an all-stock deal worth AUD5.76bn ($4.14bn).
Through a scheme of arrangement, the two firms will merge to create an AUD16bn ($11.47bn) global gold producer.
The combined company will have high-margin assets that are exclusively located in Tier-1 jurisdictions, with a targeted gold production of 2Mozpa by FY27.
Its portfolio will feature three large scale production centres in Kalgoorlie, Yandal and North America.
Saracen Mineral has three operations within 300km of Kalgoorlie, Western Australia. These include Carosue Dam, Thunderbox, and a 50% stake in the Super Pit, where it partners Northern Star Resources.
Currently, Northern Star Resources is engaged in operating at three concentrated centres in Western Australia. These include Jundee, Kalgoorlie, and Pogo.
Northern Star executive chair Bill Beament said: “Northern Star has only ever pursued growth when it will create value for shareholders, and this merger-of-equals will create an abundance of value for both Northern Star and Saracen shareholders.
“This is significant value-creating M&A. Our position as joint venture partners at 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.”
Key terms of the Northern Star, Saracen Mineral merger
As per the terms of the scheme, Saracen Mineral’s shareholder will be issued 0.3763 Northern Star shares for each share they hold in Saracen Mineral.
After the implementation of the scheme, Northern Star’s shareholders will hold a 64% stake in the enlarged entity, while the remaining 36% stake will be held by Saracen Mineral.
Saracen Mineral managing director Raleigh Finlayson said: “The benefits which will flow to Saracen shareholders from this merger are significant. The pre-tax synergies alone are expected to be worth in the order of A$1.5 to A$2.0 billion over the next 10 years.
“Saracen shareholders will own 36.0% of the combined group and therefore share in the significant benefits of these synergies, which is value that would not have been available to our shareholders otherwise. It is difficult to foresee anything like that reduction in our cost base outside of this merger.”
The closing of the merger is expected to take place in early 2021. It will be subject to approval from Saracen Mineral’s shareholders, court approval, and meeting of other customary conditions.