Northern Star Rejects $27 Billion Gold Fields Takeover as Undervalued

Australia’s biggest gold miner, Northern Star Resources, has formally rejected an unsolicited A$38.7 billion ($27.1 billion) takeover proposal from South Africa’s Gold Fields, calling the bid “highly opportunistic” and well short of the company’s true worth.

Northern Star said on Monday it received the proposal on September 14. Under its terms, shareholders would have received 0.3125 new Gold Fields shares plus A$7.25 in cash for each Northern Star share — worth A$27.00 a share on September 11 prices, a 22 per cent premium at the time, according to Morningstar. By Friday’s close, as Gold Fields’ share price slid, the implied value had fallen to roughly a 14 per cent premium, Reuters reports.

“Gold Fields has sought to acquire one of the world’s premier gold portfolios at a price that falls well short of what the Board considers to be its fundamental value and at a highly opportunistic time,” Chairman Michael Chaney said in a statement.

A successful bid would have ranked among the largest-ever takeovers of an Australian company, Reuters reports, and signals rising consolidation pressure in the gold sector.

Northern Star has been under pressure from activist investor Elliott Investment Management, which holds about 5.6 per cent of the miner and has pushed for a strategic review, even a sale. The company appointed a new chief executive in July, with former Glencore executive Suresh Vadnagra due to take over on October 5. Northern Star shares jumped more than 10 per cent in early Sydney trading on Monday, according to Reuters.

Sources

• Reuters — Australia’s Northern Star rejects $27 billion takeover approach from Gold Fields
• Morningstar — Northern Star Rejects $27 Billion Takeover Proposal From Gold Fields