SA’s Gold Fields warns against hostile takeover

JOHANNESBURG – South African gold mining giant Gold Fields yesterday warned its shareholders that rival Harmony was “financially stretched” and was offering them over-valued shares in a hostile takeover bid.

Gold Fields, in its official offer response document, listed a number of reasons on why its shareholders should reject Harmony’s offering of a 29 per cent premium for Gold Fields that could create the world’s leading gold mining group. “Harmony’s hostile offer has an inequitable structure which seeks to disenfranchise the majority of our shareholders,” Gold Fields chief executive Ian Cockerill said in the document.”Furthermore, this offer does not represent fair value and is funded by overvalued Harmony shares.We cannot recommend this to our shareholders.””The Board …considers Harmony to be financially stretched, citing Harmony’s five consecutive quarterly losses and the recent downgrade of Harmony’s credit rating by Fitch Ratings.”The document said the Harmony offer destroyed shareholder value.”Harmony is offering Gold Fields shareholders overvalued Harmony shares at a minimal premium.The offer significantly undervalues Gold Fields shares and does not offer shareholders a fair value exchange.”Harmony’s offer was on the basis of 1,275 new Harmony shares for each Gold Fields share and 1,275 new Harmony American Depositary Shares (ADS) for each Gold Fields ADS.These terms value Gold Fields at US$8,1 billion (about N$49 billion).The document also criticised Harmony for making an “early settlement offer” to the largest shareholder, Russia’s Norilsk Nickel, which owns 20 percent of Gold Fields.The Board believes that this early settlement could leave Harmony, with the support of Norilsk, free to control Gold Fields without having successfully bid for the whole company.”Based in Johannesburg, Gold Fields employs 48 000 people across its operations in South Africa, Ghana, Australia and in Finland.Shareholders are scheduled to vote on the offer at a special meeting on November 12.Gold mines in South Africa have produced much of the world’s gold since the precious metal was first discovered in the country, near Johannesburg in 1886.South Africa remains the world’s largest producer of gold, the Johannesburg-based Financial Mail reported recently.-Nampa-AFP”Harmony’s hostile offer has an inequitable structure which seeks to disenfranchise the majority of our shareholders,” Gold Fields chief executive Ian Cockerill said in the document.”Furthermore, this offer does not represent fair value and is funded by overvalued Harmony shares.We cannot recommend this to our shareholders.””The Board …considers Harmony to be financially stretched, citing Harmony’s five consecutive quarterly losses and the recent downgrade of Harmony’s credit rating by Fitch Ratings.”The document said the Harmony offer destroyed shareholder value.”Harmony is offering Gold Fields shareholders overvalued Harmony shares at a minimal premium.The offer significantly undervalues Gold Fields shares and does not offer shareholders a fair value exchange.”Harmony’s offer was on the basis of 1,275 new Harmony shares for each Gold Fields share and 1,275 new Harmony American Depositary Shares (ADS) for each Gold Fields ADS.These terms value Gold Fields at US$8,1 billion (about N$49 billion).The document also criticised Harmony for making an “early settlement offer” to the largest shareholder, Russia’s Norilsk Nickel, which owns 20 percent of Gold Fields.The Board believes that this early settlement could leave Harmony, with the support of Norilsk, free to control Gold Fields without having successfully bid for the whole company.”Based in Johannesburg, Gold Fields employs 48 000 people across its operations in South Africa, Ghana, Australia and in Finland.Shareholders are scheduled to vote on the offer at a special meeting on November 12.Gold mines in South Africa have produced much of the world’s gold since the precious metal was first discovered in the country, near Johannesburg in 1886.South Africa remains the world’s largest producer of gold, the Johannesburg-based Financial Mail reported recently.-Nampa-AFP