Mining group Harmony was in a position last year to ”materially influence” key strategy of hostile takeover target Gold Fields, the Competition Appeal Court has found.
Judge Dennis Davis on Thursday gave the court’s reasons for its decision in November to interdict Harmony from exercising voting rights attached to shares it had acquired in Gold Fields.
The limitation would remain effective, pending the final approval by competition authorities of Harmony’s takeover bid — which seeks to create the biggest gold mining company in the world.
Harmony sought to acquire up to 34,9% of Gold Fields’ shares under an early settlement offer. Davis said this, together with an undertaking from the Russian company Norilsk, Gold Field’s biggest shareholder, have allowed Harmony to effect a ”permanent and irreversible change” to the very structure of Gold Fields.
At the very least it would have been able to materially influence a key policy of Gold Fields by ensuring that it could not enter into a merger with Canadian mining company IAMGold.
Doing this through voting rights attached to shares it acquired would effectively constitute implementation of a merger, in breach of the Competition Act.
The damage to Gold Fields in the event that Harmony’s proposed merger with it was not approved by competition authorities ”could not probably be commercially undone”, Davis said.
Gold Fields appealed a Competition Tribunal ruling that allowed Harmony to pursue the takeover.
The tribunal ruled that an agreement between Harmony and Norilsk to vote together against the IAMGold deal of Canada, did not go against the Competition Act, and was therefore permissible.
Gold Fields shareholders voted in December to reject the IAMGold deal.
The Competition Commission has said it will make its recommendations on a Gold Fields/Harmony merger by the end of the month. – Sapa