$7.9 billion mining bid

Press, 23 September 1988, Page 16

$7.9 billion mining bid

NZPA-Reuter London A firm part-owned by the South African-based AngloAmerican • and De Beers groups has made a huge takeover bid for the British-based mining giant, Consolidated Goldfields, the West’s second largest gold producer. Goldfield signalled what may be the start of a bitter take-over battle by rejecting the surprise cash and share offer which valued it at £2.9 billion (SNZ7.9 billion), possibly the largest take-over bid ever in Britain, according to some market experts. The bid threatened a British political row and might worry the American antiapartheid lobby. If successful, it would change the face of the world mining industry. Goldfields owns half of Newmont Mining Corporation of the United States, with the biggest gold mine in America.

Consolidated Gold said in a statement that the bid by Minerals and Resources Corporation (Minorco) and equivalent to £13.06 ($NZ35.80) a share, was unwelcome and "devoid of commercial logic.” Its shares soared 40 per cent to £15.05 on the London market. Other mining shares also gained.

Minorco, an overseas investment arm of the gold empire of the South African magnate, Harry Oppenheimer, already holds 29 per cent of Goldfields; is bidding for the remaining 71 per cent.

It said it planned to dispose of Goldfields’ extensive interests in South Africa if the bid succeeded. In particular, it said, it would negotiate to sell its 38 per cent stake in Gold Fields of South Africa, to the Rembrandt Group, a diversified South African group with interests in tobacco, mining and other

industries, to which Consolidated Goldfields has already sold 10 per cent of Gold Fields. Anglo American Corporation, of South Africa, the mining giant, and its associated diamonds firm, De Beers Consolidated Mines, are Minorco’s two major shareholders. But they said that the public shareholding in Minorco would be increased if the bid succeeded. Their combined holding would fall from 60 per cent to a minority 40 per cent in what Minorco said would be a SUSS to SUS 6 billion company created through its purchase of Goldfields. Mr Mike Crawshaw, an analyst at the London brokers, Philips and Drew, said Goldfields had successfully fought off several unwelcome bids in recent years and Minorco would probably have to sweeten its bid to win. "Minorco will have to raise it to £l6 or £l7 because Goldfields will have a very well prepared defence,” he said.

Goldfields faced a dawn raid in 1981 by the same Minorco interests backed by Anglo and De Beers. The South African giants, which are interlinked, have held around 29 per cent of it through Minorco since. Last year, Goldfields defeated a bid by the American businessman, T. Boone Pickens, who tried to take over Newmont Mining Corporation.

“They certainly have something planned,” Mr Crawshaw said. “It could be along the lines of selling their South African business to pre-empt Minorco.”

The chairman of Goldfields, Mr Rudolph Agnew, said that if Minorco did win control “it will have to begin dismembering Gold Fields both to help finance the bid and in recognition of the regulatory and commercial problems associated with South African control.” He said his company was the non-communist world’s second biggest producer of gold, after Anglo. Minorco, announcing its bid, named South Africanborn Sir Michael Edwardes, aged 57, a former chairman of British Leyland as its new chief executive and deputy chairman.

The Minorco offer is £l9 in cash and one new Minorco share for every two Gold Fields shares. This Minorco says, gives shareholders an increasein capital value of 20.4 per cent and an increase in income of 143.3 per cent. (The Gold Fields shares are valued at 25p each and the Minorco shares at SUSI.4O each.)

Minorco is incorporated in Luxemburg and quoted on a number of stock exchanges, including London and Luxemburg.

Its principal holdings are in Gold Fields (28.9 per cent), Engelhard Corporation (30.5 per cent), Charter Consolidated Pic (36 per cent), Inspiration Resources Corporation (56.2 per cent) and Adobe Resources Corporation (48.3 per cent). After its sale of its holdings in Salomon and Anglo American Investment Trust last year, Minorco also has about SUSB9O million in liquid funds.

In the year ended June 30, Minorco reported earnings before extraordinary items of 5U5262.3M and had net assets at market value at September 19, 1988, of approximately SUS3.I billion. The market capitalisation of Minorco is about SUS2.I billion.