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SHARES of both Harmony Gold and its hostile bid target, Gold Fields, were pricing in the possibility of a slightly higher bid, analysts said, but Harmony vowed yesterday not to change its initial partial offer. The price of Gold Fields shares has climbed to about 2% above the return shareholders would get by tendering the shares to Harmony in its all-share bid valued at $7,1bn. Analysts said this showed some investors were hoping for a higher premium amid doubts about the success of the early offer. The share movements come amid media speculation that Gold Fields had offered to buy Russian miner Norilsk Nickel’s 20% stake in Gold Fields for $2bn — over $800m more than Norilsk paid when it bought the stake from Anglo American. Norilsk’s share price rose 1,4% to 1713,68 roubles on the news. Gold Fields shares in the merger ratio were at a discount until they moved to parity about a week ago. Harmony marketing director Ferdi Dippenaar said the early settlement offer for up to 34,9% of Gold Fields shares, which closes on Friday, would not be changed. «This is a very quick settlement offer and there’s no intention of altering the premium paid,» he said. Harmony, the world’s sixth-biggest gold producer, is offering 1,275 new Harmony shares for each share of Gold Fields, the fourth-biggest gold producer. There were only two scenarios under which a higher premium might be paid, he said — if Harmony later gets 90% of Gold Fields shares and wants to squeeze out minority shareholders, or if the Gold Fields board recommended Harmony’s takeover bid. Gold Fields shares closed 0,82% down at R88,35 yesterday while Harmony lost 0,9% to R68,03 as the benchmark JSE Securities Exchange SA top 40 index lost 1%. «The shares could be showing that people expect a higher bid or otherwise people don’t expect Harmony to get a lot of support,» a fund manager said. Harmony would probably get 10%-20% of shares in its early settlement offer. «I don’t think Harmony is going to get a lot of support … maybe then another offer will be on the table,» the fund manager said. Dippenaar declined to say how many shares had been tendered, but said some people might be waiting for a change in the offer, «which will definitely not be forthcoming». «Typically the uptake increases the closer you get to the closing date,» he said. Several fund managers have come out publicly against the deal, including London-based Graham Birch of Merrill Lynch Investment Managers and SA’s Darryll Castle of Stanlib Asset Management. Some investors doubt Harmony, which has suffered losses for the past five quarters, can better manage Gold Fields’ higher-quality mines than current management. More uncertainty clouded efforts by Harmony to forge the world’s largest gold producer when industry sources said on Friday that Gold Fields was mulling a range of defence strategies. The strategies included Gold Fields buying back the 20% stake held by Norilsk. Gold Fields could sell its international mines to finance the deal if a plan to merge those assets with Canada’s IAMGOLD failed to get shareholder approval on December 7, the sources said. Gold Fields said on Friday that the IAMGOLD deal was not key to its international strategy. Analysts said this was a tacit admission that the deal would be voted down. Dippenaar said that shareholders could lose out if they waited for such an alternative floated by Gold Fields, which would need lengthy shareholder and regulatory approval. The two companies’ share prices, which have slid since Harmony launched its bid last month, would recover only once there was some certainty about the future, he said. Business Day
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