Newmont/Goldcorp -- summary under Direct Target Acquisition

Overview

Newmont is proposing to acquire all the shares of Goldcorp pursuant to an Ontario Plan of Arrangement for consideration consisting of 0.3280 of a Newmont Share and US$0.02 in cash for each Goldcorp Share. This would be a direct acquisition, i.e., no Canadian Buyco, and no use of exchangeable shares. The acquisition would occur on a non-rollover basis for U.S. purposes, i.e., the cash boot is considered to be sufficient to “bust” the IRC s. 351 rollover.

Goldcorp

Goldcorp is an OBCA corporation whose head office is located in Vancouver. It is a senior gold producer engaged in the acquisition, exploration, development, operation, and reclamation of precious metal properties in Canada, the United States, Mexico and Central and South America. Its shares are listed for trading on the NYSE and TSX. No Goldcorp Shareholder beneficially owns, directly or indirectly, or exercises control or direction over, voting securities carrying 10% or more of the voting rights attached to the outstanding Goldcorp Shares. In its 2018 financial statements, its four Canadian mines represent $7.1B out of a total gross carrying value of $21.5B. It holds its non-resident subsidiaries through Canadian or B.C. subsidiaries.

Newmont

Newmont’s original predecessor was incorporated in 1921 in Delaware. Newmont’s shares traded on the NYSE. Newmont is primarily a gold producer with significant operations and/or assets in the United States, Australia, Peru, Ghana and Suriname. Its corporate headquarters are located in Greenwood Village, Colorado.

Plan of Arrangement Steps

1. Each Dissent Share will be assigned to Newmont.
2. Each Goldcorp Share (other than any Goldcorp Share held by Newmont or any of its affiliates) will be assigned by the holder thereof to Newmont in exchange for the Consideration of 0.3280 of a Newmont Share and US$0.02 in cash for each Goldcorp Share.
3. Each Goldcorp Option outstanding at the Effective Time (whether vested or unvested) will remain outstanding on its existing terms and upon its exercise the holder thereof shall be entitled to receive a fraction of a Newmont Share.
4. Similarly, each Goldcorp Phantom RSU and Goldcorp PSU will remain outstanding on its existing terms.
5. Each Goldcorp RSU will be deemed to be exchanged by the holder thereof in accordance with s. 7(1.4) for a Newmont RSU.

Consequences of Arrangement

On the Effective Date, Goldcorp will become a wholly-owned subsidiary of Newmont and Newmont Goldcorp will continue the operations of Newmont and Goldcorp on a combined basis. Following completion of the Arrangement, existing Goldcorp Shareholders will own approximately 35% of the issued and outstanding common stock of Newmont.

Canadian tax consequences

A Resident Holder (other than a Resident Dissenter) who disposes of Goldcorp Shares to Newmont under the Arrangement will be considered to have disposed of each Goldcorp Share for proceeds of disposition equal to the sum of the Cash Consideration and the aggregate fair market value at the Effective Time of the Consideration.

U.S. tax consequences

A U.S. Holder’s exchange of Goldcorp Shares for the Consideration pursuant to the Arrangement will be a taxable transaction for U.S. federal income tax purposes. Goldcorp does not believe that it was a PFIC for its last taxable year and based on current plans and financial expectations, does not expect to be a PFIC for its taxable year which includes the Effective Date.