US gold giant Newmont Mining (NYSE:NEM) has offered investors a one-time special dividend of 88 cents per share, if its $10 billion-friendly takeover of Goldcorp (TSX:G) (NYSE:GG) is approved, in an effort to stop a brewing shareholder revolt that could obstruct the deal with the Canadian gold miner.
Some of Newmont’s shareholders, including hedge fund giant Paulson & Co., had criticized the deal, saying it would deliver outsized benefits to Goldcorp shareholders, given that company’s poor performance. But today’s offer made them change their mind.
Paulson, which holds 14.2 million shares in Newmont and last week said it would vote against the deal, said Monday that, while small, the dividend was a step in the right direction. “We don’t longer oppose the transaction,” it said.
Joe Foster, a portfolio manager at VanEck — one of the biggest Newmont shareholders — had focused his criticism on the “outrageous payouts” that would be given to Goldcorp executives after the merger.
“I don’t think shareholders should support the lavish lifestyles of the Goldcorp executives for one thing,” Foster told Bloomberg last week. On top of that, it is unfair that Goldcorp shareholders should benefit from the recently-announced joint venture between Newmont and Barrick Gold Corp. in Nevada, given that was negotiated after the Goldcorp-Newmont terms were set, he said.
The tone was quite different after the announced dividend: “Companies always claim they’re going to create synergies,” Foster said. “It’s great to see Newmont putting their money where their mouth is and giving us a payout up front.”
Goldcorp shareholders are set to vote on the deal that would create the world’s largest producer by output on April 4, and Newmont investors on April 11.
Greenwood Village, Colorado-based Newmont also announced the Mexico’s Competition Commission had approved the deal without conditions. This follows clearance from the Canadian Competition Bureau and the Korea Fair Trade Commission in February.
Goldcorp shares climbed 2.5% to C$14.88 in early trade on Monday in Toronto. Newmont jumped 1.7% to a one-month high of $35.10 in New York.