TORONTO: Newmont Mining Corp will pay a special dividend of 88 cents per share in an effort to soothe unhappy shareholders if they approve its US$10 billion takeover of Goldcorp Inc, the company said on Monday.
Facing protests from investors who say Goldcorp shareholders benefit too much from the deal, Newmont said the immediate cash payment would represent a portion of the savings from a separate agreement with Barrick Gold Corp.
Newmont's friendly bid to buy Goldcorp to create the world's biggest gold producer preceded the agreement with rival Barrick to create a joint venture combining their operations in Nevada. Newmont offered 0.328 of its shares and 2 cents for each Goldcorp share.
Top Newmont shareholders including Paulson & Co and Van Eck International Investors said last week the Goldcorp proposal transferred to Goldcorp shareholders too much of US$4.7 billion in synergies from the Barrick venture. Paulson said last week it would vote against Newmont's acquisition of Goldcorp.
"In the discussions I've had with a number of our large, long-term shareholders this morning, they're quite pleased with this outcome and are supportive of it," Newmont Chief Executive Gary Goldberg told Reuters on Monday.
A Paulson & Co spokesman said the firm is evaluating the announcement.
"We're very pleased with Newmont's decision," said Joe Foster, portfolio manager at Van Eck, Newmont's third-biggest shareholder. "Companies always claim they're going to create synergies. It's great to see Newmont putting their money where their mouth is and giving us a payout up front."
In an investor presentation earlier this month, Newmont said Goldcorp shareholders would get US$600 million of the pre-tax synergies from the joint venture with Barrick.
"If one assumes this dividend payment of US$469 million reflects the after-tax value of the JV that would have been previously shared with Goldcorp shareholders, it would appear to be fair," Josh Wolfson, managing director of metals and mining at Desjardins Securities, said by email.
Goldcorp shares jumped as much as 3.7 percent and were trading up 2.9 percent at CUS$14.93 on Monday afternoon in Toronto, erasing Friday's 2.9 percent loss. Newmont climbed 1.2 percent to US$34.91, on track for its highest close in a month in New York trading.
Goldcorp said in a separate statement it supported the special dividend.
Also, Goldcorp said proxy advisory firm ISS recommended on Monday that its shareholders support Newmont's takeover offer when they vote on April 4. Newmont shareholders will vote on April 11.
(Reporting by Nichola Saminather; Editing by Bill Trott and Marguerita Choy)