Australia's top gold miner, Newcrest Mining , raised its offer for local rival Lihir Gold to $8.8 billion, winning the support of its target to create the world's 4th-largest listed gold miner.
The new cash and share offer, Newcrest's third bid, values Lihir at A$4.03 a share based on Newcrest's last trade, a small increase on the last offer that Lihir rejected last month and a 10 percent premium to Lihir's close on Monday.
Lihir's board said the merger made a lot of sense strategically and it was now happy with the price.
We are therefore pleased to have secured an improved financial proposal that we can recommend to our shareholders, Lihir Chairman Ross Garnaut said in a statement.
Lihir shareholders are to receive one Newcrest share for every 8.43 shares they own, plus A$0.225 cash a share, less any Lihir dividend declared or paid for the half-year ending June 30. It is flexible on the mix of cash and shares they can choose.
The combined organization will be Asia-Pacific's leading gold producer with a standout portfolio of long-life, high margin, tier-one gold assets, Newcrest Chairman Don Mercer said in a statement.
In the wake of a plan by the Australian government to slap miners with a 40 percent super profits tax, the move on Lihir makes more sense than ever for Newcrest as Lihir's main mine is in Papua New Guinea, which will not be touched by the new tax.
It also gives Newcrest a growth platform in West Africa, where Lihir recently acquired mines and acreage in Ivory Coast.
Top global gold miners Barrick Gold , Newmont Mining and AngloGold Ashanti are seen as potential spoilers of the deal, potentially going after Newcrest or Lihir.
Analysts, however, have said their chances of success were limited as they would be hard pressed to be able to pay more than A$9 billion in cash, and Australian shareholders were unlikely to want foreign scrip.
($1=1.079 Australian Dollar)
(Reporting by Sonali Paul; Editing by Ed Davies)