Northern Star rejects $27 billion takeover approach from Gold Fields
The Australian gold miner turned down a cash-and-share proposal it says undervalued the company, according to the Wall Street Journal.
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Northern Star Resources has rejected a $27 billion takeover proposal from Gold Fields, according to the Wall Street Journal.
Gold Fields offered 0.3125 of its own shares plus A$7.25 in cash for each Northern Star share, according to GuruFocus. Northern Star received the proposal on September 14, when it was worth A$27.00 a share. By Friday, September 25, the value had slipped to A$25.19 based on Gold Fields' closing price, Reuters reported.
Reuters reported that the implied offer represented a premium of only 14% to Northern Star's last closing price, well below the roughly 30% premium that Australian takeovers typically need to succeed. Northern Star Chairman Michael Chaney said Gold Fields was seeking to acquire the company at a price well short of its fundamental value and at a highly opportunistic time, Reuters reported. Northern Star also pointed to the higher jurisdictional risk of holding Gold Fields shares as a reason for turning down the approach, according to a Reuters report syndicated by The Daily Guardian.
A successful bid would have ranked among the largest-ever takeovers of an Australian company, and comes after a rally in gold prices to record highs earlier in the year had faded, Reuters reported. Northern Star has faced a campaign from activist investor Elliott Investment Management, which in June pushed for a strategic review that could lead to a sale to a rival such as Gold Fields. Under pressure from Elliott, which said last month it held about 5.6% of the miner, Northern Star appointed a new chief executive in July, Reuters reported. Elliott partner John Pike said in a statement that the firm believed there was immense potential for value creation at Northern Star that any transaction would need to reflect, according to Reuters.
The rejection keeps Northern Star independent but leaves the gold sector without a major consolidation deal at a time when mergers and acquisitions are dominating headlines across energy, technology and other industries. The outcome is neutral for the broader market, though it may disappoint investors who had been betting on consolidation or a strategic reshuffling among precious metals producers.