Lihir Gold shareholders approve $22.3 billion merger with Newcrest Mining

Shareholders of Lihir Gold Limited (LGL), Australia's second-largest gold miner, today voted overwhelmingly in favour of the A$25-billion ($22.3 billion) merger with gold major Newcrest Mining, to create the world's fourth-largest gold company by market capitalisation.

The merger now has to be approved by the National Court in Papua New Guinea, due this Friday. If approved, the merger will go into effect on 30 August 2010 and is scheduled to be implemented on 13 September 2010.

LGL shareholders will receive one Newcrest share for every 8.43 LGL shares they own and A$0.225 in cash per share.

In April 2010, the LGL board had rejected Melbourne-based Newcrest's offer to buy LGL for A$9.2 billion, on the ground that the offer did not represent good value for its shareholders as it undervalued the company, both in terms of its existing business, and in terms of the potential value expected to be delivered to shareholders in the future. (See: Australia's Lihir Gold rejects Newcrest's A$9.2-billion offer).

A month later, Newcrest hiked its bid to $8.79 billion and LGL directors unanimously recommended that shareholders vote in favour of the scheme in the absence of a superior proposal. (See: Lihir Gold succumbs to Newcrest's $8.79 billion sweetened merger offer).

But the LGL board said that under the merger implementation agreement signed on 4 May, it would continue discussions with rival bidders until 8 June and would allow Newcrest to complete due diligence in that period.