VanEck Shares Paulson's Concerns About Newmont-Goldcorp Merger

(Bloomberg) – Paulson & Co. is not the sole shareholder of Newmont Mining Corp. to express its concern about Goldcorp Inc.'s terms of purchase of the Gold Mine.

"I think Paulson has a valid point," said Joe Foster, portfolio manager at VanEck – one of Newmont's largest shareholders. When the deal was concluded, investors were not aware of the "outrageous payments" that would be made to Goldcorp's executives after the merger, he said.

In addition, it is unfair for Goldcorp shareholders to benefit from a joint venture between Newmont and Barrick Gold Corp. in Nevada, since this was negotiated after Goldcorp-Newmont conditions were set, he said.

Growing investor concerns drove down Goldcorp's stock to 5% in New York. Shares closed down 3.2% to $ 10.80, while Newmont rose 0.5%.

Newmont has not commented on investor criticism, said Friday the government spokesman, Omar Jabara, by e-mail. The miner based in Greenwood Village, Colorado, had previously announced that a merger with Goldcorp would generate a value of more than $ 4.4 billion. The merged company would be the largest gold mine in the world, with a sustainable production of 6 to 7 million ounces per year.

Committed to the merger

Goldcorp remains committed to the merger and will recommend that shareholders vote in favor of the merger at an extraordinary meeting on April 4, said brand spokeswoman Christine Marks by e-mail.

On Thursday, Paulson said he would not support the proposed merger between Newmont and Goldcorp unless conditions are changed. Paulson said that a 23% reduction in the value of the deal would help ease his concerns because, under the current agreement, Goldcorp shareholders actually benefit from the benefits of the joint venture recently announced.

"I think Paulson's analysis could be aggressive, but I think that directionally they have the right idea," Foster said in a telephone interview on Friday. "I do not think shareholders should support the lavish lifestyle of Goldcorp executives on the one hand. And second, Goldcorp's shareholders are not entitled to the synergies of the joint venture because it was not part of the deal. "

Executive Payment

Shareholders, including VanEck, had previously criticized Goldcorp Chairman Ian Poer's pension allowance increase from $ 4.5 million to about $ 12 million if the company completed its merger. with Newmont. Initially, Telfer was expected to join the Newmont Board of Directors as Vice President. But earlier this month, Goldcorp announced that it would not accept the new job.

The British Columbia Investment Management Corp., which holds 3.85 million shares in Goldcorp and a small stake in Newmont, announced Friday that it would vote against the merger in part because of the payment to Telfer. "This is contrary to the principle of pay-for-performance governance and creates a troubling precedent in the financial markets," said BCI in a statement.

Foster said that he had not decided yet whether he would vote for the agreement or not. VanEck held 5.9% of Newmont's shares and approximately 6.2% of Goldcorp's outstanding shares at the end of 2018, according to data compiled by Bloomberg. At Thursday's closing prices, the Newmont stake would be valued at $ 1.08 billion versus $ 596.4 million for the Goldcorp stake.

Date of registration

Newmont investors who held shares on the February 20 record date will be entitled to vote on the amalgamation on April 11, according to Newmont's proxy materials. A spokesman for Paulson said the hedge fund had acquired 14.2 million shares this year but did not want to specify whether they had been bought before or after the record date.

Paulson sold his entire position in Goldcorp in 2019 for the reasons outlined in the release, the spokesman said. According to data compiled by Bloomberg, Paulson held approximately 800,000 shares of Goldcorp at the end of 2018.

Newmont's bid was made just months after Goldcorp's stock hit its lowest level since 2002.

The merger was also severely criticized by Barrick during a hostile bid on Newmont last month, which has since been withdrawn in favor of the joint venture between the two companies. Barrick CEO Mark Bristow said he did not think the Newmont-Goldcorp combination created value and described Goldcorp's assets as "less than attractive."

Under the current terms, Newmont would create more value by not merging once the joint venture with Barrick created, said Paulson. He also highlighted "remarkably" divergent results for the fourth quarter of Newmont and Goldcorp, announced after the merger. The premium is "unjustified" given the poor performance of Vancouver-based Goldcorp, the hedge fund said.

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