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Gold Fields fate now in the hands of shareholders

Gold Fields fate now in the hands of shareholders < News < Bet On Markets

Mining giant Gold Fields will know after a crucial shareholder vote on Tuesday if it has succeeded in ending a cheeky hostile takeover bid by its rival Harmony to create the world’s largest gold producer.

The number four gold miner in the world has been fighting tooth and nail to halt the unexpected bid by Harmony launched on October 18.

Harmony, which has suffered consecutive losses in the past three quarters, offered 1.275 of its own shares for each Gold Fields share, a 29 percent premium from the share value at closing of October 14.

Its ambitious bid came while Gold Fields was in the process of negotiating a merger of its non-South African assets with the Canadian-based IAMGOLD to create a new company called Gold Fields International.

But Gold Fields failed to consult major shareholder Russian Norilsk Nickel on the IAMGOLD transaction, alienating a 20 percent holder in its company.

Meanwhile Harmony, eyeing the higher grade ore mined by Gold Fields, moved in and approached Norilsk for support for a hostile takeover of Gold Fields.

The Russian company agreed and signed an «irrevocable agreement» to support the Harmony and announced its opposition on Friday to the IAMGOLD proposal.

«This is like a small corner cafe trying to take over a large chain store,» said an analyst at a Johannesburg-based brokerage firm who did not want to named.

«If they pull it off, it would be quite a coup for them.»

In terms of market capitalisation, Gold Fields is one-and-a-half times bigger than Harmony.

Gold Fields and Harmony, the world’s number six gold miner, have spent the past weeks embroiled in vicious public slanging matches in attempts to woo shareholders.

«It is reaching pretty ugly stages on both sides,» said analyst David Shapiro of Johannesburg-based brokerage house Barnard Jacobs Mellet.

Gold Fields also lodged objections to the takeover in no fewer than four courts N it lost most of them, except for one crucial appeal to the Competition Appeal Court.

The court ruled that Harmony, which has since acquired some 11.8 percent of Gold Fields shares N not enough to get a controlling 34.9 percent stake, even with Norilsk’s support N would not be allowed to use those shares to vote down the IAMGOLD proposal.

Harmony tried to get permission to lodge an urgent appeal, but the court said it could appeal later if it was evident that its vote would have made a difference in the result.

«If all the shareholders are allowed to vote, we think we will vote the IAMGOLD proposal down,» Harmony spokesman Patrick Lawlor told AFP.

Gold Fields was equally confident: «We are bullish, we continue to get very supportive feedback from our shareholders,» a spokesman said.

But analyst Shapiro said it would be «quite bold» for anybody to predict what would happen.

«It’s almost like the American elections … both sides are claiming victory.»

If Gold Fields wants to put an end to Harmony’s takeover bid once and for all, it has to get 51 percent of its shareholders to support the IAMGOLD transaction on Tuesday.

Otherwise, the takeover battle continues.

By Fienie Grobler

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