Australia’s largest ASX-listed gold miner, Northern Star Resources, has rejected an unsolicited AU$38.7 billion takeover proposal from South Africa’s Gold Fields, saying the proposal opportunistic and undervalues the company.
The non-binding indicative offer proposed acquiring 100 per cent of Northern Star shares via a scheme of arrangement. Under the default terms, Northern Star shareholders would have received 0.3125 new Gold Fields shares, issued as CHESS Depositary Interests on the ASX, plus AU$7.25 in cash per share.
The offer represented an implied value of AU$27.00 per share based on market prices at the time of submission, reflecting a 22 per cent premium to Northern Star’s closing price on September 11.
However, market movements subsequently reduced the implied value to AU$25.19 per share, or AU$36.1 billion total, by September 25.
Northern Star’s board unanimously rejected the proposal, stating it materially undervalues the company’s tier-1, long-life assets in low-risk jurisdictions. The board also raised concerns regarding the 73 per cent scrip component, which it argued exposes local shareholders to higher operational and jurisdictional risks.
Northern Star Chairman Michael Chaney noted the timing was highly opportunistic, coming ahead of key near-term value catalysts, including the ramp-up of the Fimiston Mill and the arrival of incoming Managing Director Suresh Vadnagra.
“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,” he said.
“Furthermore, Gold Fields has asked our shareholders to take nearly three-quarters of the consideration in Gold Fields stock, which carries a meaningfully higher jurisdictional risk profile than the exposure they hold today.”
In response, Gold Fields defended the rationale, highlighting that a merger would create the world’s second-largest gold producer, generating 4.1 million ounces annually.
Gold Fields CEO Mike Fraser said combining contiguous Western Australian operations could unlock US$4 billion to US$5 billion (AU$6 billion to AU$7.5 billion) in synergies.
“While we are disappointed that the Northern Star board has not yet chosen to engage on a proposal that we continue to believe offers compelling strategic and financial benefits for both sets of shareholders, we remain open to constructive dialogue and continue to seek engagement with the Northern Star board to discuss the merits of the proposed transaction,” Fraser said.
Gold Fields also revealed plans to pursue a portfolio optimisation strategy if a deal proceeded, aiming to sell at least US$4 billion in assets to assist deleveraging.
