Australian gold miner Northern Star offers to buy Saracen Mineral in S$5.57b deal

[MELBOURNE] Australian gold miner Northern Star Resources on Tuesday offered to buy smaller peer Saracen Mineral Holdings in a A$5.76 billion (S$5.57 billion) deal that will create a global top-10 gold miner by value.

In a joint statement, the boards of both companies recommended shareholders vote in favour of the proposal, in the absence of a superior offer.

Under the proposal, Saracen shareholders would receive 0.3763 new fully paid ordinary shares in Northern Star for each share held and a special dividend of 3.8 Australian cents per share.

The deal comes after each of the companies acquired a 50 per cent stake each in the Super Pit gold mine in Western Australia, the country's largest open cut gold mine.

"It will make a globally competitive gold miner. I think it's quite positive for Northern Star shareholders," said Warren Edney, research analyst at EL&C Baillieu.

Northern Star will own 64 per cent of the combined entity and Saracen will own the remaining 36 per cent, the two companies said.

"The benefits which will flow to Saracen shareholders from this merger are significant," said Saracen managing director Raleigh Finlayson, who will take over the same role in the combined group on completion of the deal.

"The pre-tax synergies alone are expected to be worth in order of A$1.5 billion to A$2.0 billion over the next 10 years." A shareholder meeting on the proposal will be held in January 2021.

REUTERS