World number six gold miner Harmony Gold remains “absolutely” committed to completing its bid for rival Gold Fields and is awaiting the Competition Tribunal’s decision on the proposed merger of the two entities, Harmony chief executive Bernard Swanepoel said on Monday afternoon.
“I think we are near the start of the race, I don’t think we are near the end of the race,” he added.
Harmony’s bid for Gold Fields remains conditional as the Competition Tribunal has yet to rule on the proposed merger, Swanepoel said.
“Our bid could still go completely away, if the Competition Tribunal says our bid cannot proceed,” he added.
The tribunal’s public hearings into the proposed merger of Harmony and Gold Fields are scheduled to take place from May 3 to May 6, with the tribunal’s decision due by May 20, the same day that Harmony’s offer to Gold Fields shareholders as well as its irrevocable undertaking with Russian mining group Norilsk Nickel lapse.
Harmony is currently offering Gold Fields shareholders 1,275 Harmony shares for every Gold Fields security held.
The group secured an 11,5% stake from its early settlement offer and has secured another 0,1% so far from its subsequent offer to Gold Fields’ shareholders.
At 10am, Gold Fields’ share price was quoted at R69,50, 1,463 times Harmony’s share price of R47,50, which compares with Harmony’s offer of 1,275.
Swanepoel said that Harmony had never closed the option on increasing its offer to Gold Fields shareholders.
“I could not have ever said that I wouldn’t raise the offer, because the moment I would have said that, in terms of the takeover code, that would have been a no increase statement. That would mean, I could never, even if I changed my mind, raise my offer,” he added.
Harmony won’t overpay for Gold Fields, Swanepoel said.
If the price at which Harmony would succeed with its bid for Gold Fields was no longer a value proposition for Harmony shareholders, Swanepoel said he would then have no intention of completing the bid.
“This isn’t about the narrow definition of you win or you lose, this is about creating value for shareholders,” he added.
Harmony’s two major shareholders, African Rainbow Minerals and fund manager Allan Gray, both have said they won’t support an increase in Harmony’s offer ratio to Gold Fields’ shareholders.
“We would like our best offer to be weighed up against Gold Fields’ best alternative. By definition, their alternative will be their second best alternative, because the IAMGOLD takeover was their best alternative,” Swanepoel said.
On December 7, 2004, Gold Fields’ shareholders voted down the proposed merger of Gold Fields’ gold mines in Australia and Ghana with those of Canadian-listed IAMGOLD.
From a legal prospective, if the proposed merger of Harmony and Gold Fields gets Tribunal approval, then Harmony would have to keep its offer open for a minimum of 21 calendar days, Swanepoel said.
To extend its offer beyond May 20, Harmony would need to approach the South African Securities Regulation Panel (SRP) for its approval for the extension.
On the costs of the bid for Gold Fields, which stood at R101,8-million at the end of December 2004, Swanepoel said that the costs hadn’t increased “by that much”.
“Costs are not going up dramatically, for us, and we certainly would have incurred a few million rand more on all these frivolous legal challenges [from Gold Fields],” Swanepoel said. – I-Net Bridge