Mining company Harmony said on Monday it had obtained 10,8%t of the issued share capital of competitor Gold Fields in the first stage of its hostile take-over bid.
This represented some 53,4 million shares by last Friday’s noon deadline for the early settlement offer, the company said in a statement.
Harmony reiterated it had an ”irrevocable undertaking” from Russian mining group Norilsk to accept an offer for its (Norilsk’s) 20.03% of Gold Fields shares in the next stage of the take-over bid.
”Accordingly, Harmony now owns, has received valid acceptances of the early settlement offer or has an irrevocable undertaking to accept the subsequent offer, in respect of a total of 151,9 million Gold Fields shares representing approximately 30,9% of the entire issued share capital of Gold Fields,” the statement said.
Harmony believes that a starting position of 30,9% represents a strong platform for the subsequent offer.”
It hoped to acquire the remainder of Gold Fields’ issued shares in the next stage.
Harmony said it would post a supplementary document shortly to Gold Fields’ shareholders with the terms and conditions of the subsequent offer.
”The earliest date upon which the subsequent offer is expected to close is Friday, February 4, 2005.”
Gold Fields shareholders who sold their shares under the first leg of the deal would receive their Harmony shares by no later than Friday.
Last week, the Competition Appeal Court interdicted Harmony from exercising voting rights attached to shares it had acquired in Gold Fields. The limitation would remain effective pending final approval by competition authorities of Harmony’s take-over bid — which seeks to create the biggest gold mining company in the world.
Harmony would seek to appeal against the judgement.
The company has offered investors 1.275 of its own shares for every Gold Fields share sold. It sought to acquire up to 34,9% of Gold Fields’ shares under the early settlement offer.
Last week’s judgement arose from an appeal by Gold Fields against a Competition Tribunal ruling earlier this month that allowed Harmony to pursue the take-over.
The tribunal ruled that an agreement between Harmony and Norilsk to vote together against a planned Gold Fields merger with IAMGold of Canada, did not go against the rules of the Competition Act, and was therefore permissible.
If Harmony had managed to buy 34,9% of Gold Fields’ shares in the early settlement offer, its combined vote with
Norilsk should have been enough to stop the IAMGold merger at a shareholders meeting on December 7.
On Monday, Harmony said a ”significant number” of Gold Fields shareholders who did not take up the early settlement offer have indicated their support for the proposed merger, preferring to accept the subsequent offer.
One of the reasons was that Gold Fields management has apparently been offering its shareholders a number of ”potential inducements” to refrain from tendering their shares, Harmony said.
These apparently included a proposed buy-back by Gold Fields of the Norilsk shares at a 15% premium to Harmony’s offers, a ”potential white knight” making an offer for Gold Fields, the potential sale of Gold Fields’ international assets, the potential unbundling of certain South African assets, and a revision of the terms of the IAMGold transaction.
”Harmony believes that some of these are not capable of being implemented, especially in a manner that it would be considered attractive to Gold Fields’ shareholders,” the company statement said.
”Clearly, a number of these proposed options are also mutually exclusive and contradictory.”
Harmony said it was encouraged by ”substantial opposition” to the proposed IAMGold transaction expressed during meetings with Gold Fields shareholders.
”Harmony considers that Gold Fields’ management has already positioned itself for a vote of no confidence in this major element of its strategy.”
Harmony said it was confident it could achieve sustainable annual cost savings of at least R1-billion or 15% of Gold Fields South African cost base and build ”an exciting platform which would create value for all shareholders”.
It claimed it had been able to build a substantial, sustainable gold mining business out of mines that were discarded as
unprofitable by its competitors, including Gold Fields. Gold Fields was not immediately available for comment. – Sapa