TORONTO, March 21 (Reuters) - Paulson & Co will not support Newmont Mining Corp’s planned $10 billion takeover of rival Goldcorp Inc as the premium offered is unjustified, the investor said in a letter on Thursday.
The transaction is dilutive to Newmont shareholders and only Goldcorp shareholders would benefit from the deal’s synergies, founder John Paulson and Partner Marcelo Kim said in the letter to Newmont Chief Executive Officer Gary Goldberg.
Paulson & Co holds 14.2 million Newmont shares, according to the letter, making it one of the company’s biggest shareholders.
Newmont spokesman Omar Jabara said the company had just received the letter and was still evaluating it.
Paulson, however, said the investment firm would support a deal in which Goldcorp shareholders receive a maximum of 0.254 Newmont share rather than the 0.328 share they currently stand to get.
“At this level, the transaction would generate value for Newmont shareholders while providing Goldcorp shareholders attractive consideration and an opportunity to participate in the shared upside of the combined company,” Paulson wrote.
Newmont bid for Goldcorp in January in the gold sector’s biggest-ever takeover transaction, according to Refinitiv. Should the deal go through, it will create the world’s largest gold producer.
Goldcorp shareholders are set to vote on the deal on April 4 and Newmont investors are scheduled to cast their ballots on April 11.
Paulson also said that following the creation of a joint venture between Newmont and Barrick Gold Corp of their assets in Nevada, Newmont would create greater value as a standalone company.
Barrick and Newmont this month agreed on the joint venture, with Barrick withdrawing its hostile takeover bid for Newmont that sought to unite the world’s two largest gold producers.
Newmont shares closed up 1.4 percent at $34.33 in New York while Goldcorp shares ended up 1.8 percent at C$14.94 in Toronto. (Reporting by Nichola Saminather, editing by G Crosse)