The crucial Gold Fields shareholder vote on whether to merge Gold Fields’ international mining assets and those of Canada’s Iamgold is set to take place on Tuesday, with the result hanging in the balance.
Gold Fields holds an extraordinary general meeting on the Iamgold transaction from 9am on Tuesday, while Iamgold shareholders will vote on December 16 on the matter.
Whichever way the vote goes, it will be crucial with a sufficiently strong yes-vote seeing Gold Fields’ mining assets outside the Southern African Development Community being reverse-listed into Iamgold’s Canadian listing. At the same time, Harmony’s bid to merge with Gold Fields to form the world’s largest gold-miner will be dashed.
On the other hand, a no-vote will vindicate Harmony chief executive Bernard Swanepoel’s contention that the Iamgold merger is a poor transaction that isn’t in Gold Fields’ shareholders interests, and will pave the way for Harmony’s subsequent offer to continue.
At the close on Monday, Gold Fields’ shares on the JSE Securities Exchange (JSE) was trading at 1,283 times Harmony’s share price, from 1,328 times earlier in the day, which is a premium of 0,6% to Harmony’s offer to Gold Fields shareholders of 1,275 Harmony shares for every Gold Fields security held.
The very slight premium to Harmony’s offer indicates that investors expect the Iamgold transaction result to be very, very close.
To be approved, participating Gold Fields shareholders holding 50% plus one share of Gold Fields need to approve the deal.
However, if Harmony’s 11,8% stake in Gold Fields would have changed the result of the vote, Harmony could apply to the High Court to interdict the implementation of the proposed Iamgold transaction until its appeal in relation to the Competition Appeal Court order has been decided.
The South African judge president of the Supreme Court of Appeal has also agreed to consider convening a court in January next year to hear any appeal by Harmony, should it be required.
Harmony said it had legal advice that it can vote its Gold Fields shares and has voted them, while Gold Fields said that the partial interdict it was granted by the Competition Appeal Court on November 26 means that Harmony won’t be able to vote at the extraordinary general meeting on Tuesday.
Gold Fields CEO Ian Cockerill has argued that the creation of the Gold Fields International vehicle was an excellent opportunity for the group to accelerate its international growth strategy.
On the other hand, Swanepoel has argued that the Iamgold deal dilutes the value in Gold Fields’ international assets too much and that the decrease in the cash portion of Gold Fields’ offer to Iamgold shareholders by $200-million was “too little, too late”.
The Iamgold transaction deserves to fail on its own merits, Swanepoel recently said.
Russian mining group Norilsk Nickel — which has a 20,03% stake in Gold Fields — late last week confirmed that it had used its stake in Gold Fields to vote against the Iamgold deal via proxy.
Norilsk Nickel has also signed an irrevocable undertaking to support Harmony’s bid for Gold Fields, should all conditions be met, including that the Iamgold deal be voted down.
Support from Old Mutual Asset Managers
Following Gold Fields’ announcement that it had modified the terms of its merger deal with Iamgold, by cutting the cash payment by $200-million, Old Mutual Asset Managers (Omam), which has a 5,8% stake in Gold Fields, has said it will support the Iamgold deal.
In addition to the modified terms, Omam resources fund manager Patrice Rassou said Omam has decided to support the Iamgold transaction as the group isn’t satisfied with the Harmony offer ratio.
Rassou also indicated that Omam has lost a lot of share value as a result of the “whole battle” between Harmony and Gold Fields, and Omam is now keen to reach a solution to the affair as soon as possible.
Omam will not start considering any Harmony offer less than 1,500 Harmony shares per Gold Fields share, he added.
In addition, Cockerill announced last week that Gold Fields has received pledges of support from shareholders holding 20% of the group’s issued shares.
On Monday, a Johannesburg High Court dismissed Harmony’s application to stop Gold Fields voting its discretionary American Depository Shares (ADSs), thus giving Gold Fields an extra boost in its attempt to pass the Iamgold deal.
Harmony has put Gold Fields’ discretionary ADSs at 10% of the group’s issued share capital. A Gold Fields spokesperson on Monday refused to disclose the number of ADSs for which the group has not received proxy votes.
Proxy votes from Bank of New York ADS holders closed on November 30.
The South African government’s pension fund, the Public Investment Commissioners (PIC), has made its decision regarding the Iamgold vote on Tuesday, PIC spokesperson Mukoni Ratshitanga said on Monday.
However, Ratshitanga said that the PIC will not make a public comment on which way it will be voting. At last count, the PIC had a 6,25% stake in Gold Fields.
Sanlam Investment Management (SIM) has not made a final decision on how it will vote on the Iamgold merger, SIM chief investment officer George Howard said on Monday.
“SIM has made no final decision on how it will vote on the Iamgold merger. We will consult our clients before making a final offer. Portfolio holdings of Gold Fields and Harmony will also have an impact on the final decision. On a valuation basis, you can’t vote against the Iamgold transaction,” Howard added.
SIM has a 3,5% stake in Gold Fields and a 2,41% stake in Harmony. — I-Net Bridge