Ghana to allow AngloGold's proposed merger
May 20, 2003
By Sherilee Bridge
Johannesburg - Ghana's government would not oppose a merger between Ashanti Goldfields, Africa's fourth-largest gold mining company, and South Africa's largest gold producer AngloGold as long as the government's golden shares were not compromised, Ghana said yesterday.
The Ghanaian government, which holds 17 percent of Ashanti's shares, was seen as a potential stumbling block to the possible deal because of its power, through its golden shares, to have the last say on any change in Ashanti's ownership.
Golden shares allow governments to exercise influence over a firm, usually one that has been partially privatised, by giving it the right to decide how the firm is managed or who owns it.
Ghana News Agency quoted Nana Akomea, Ghana's minister of information, as saying the merger was alright.
AngloGold and Ashanti Goldfields were forced to publish cautionary announcements last week after word of the potential merger was leaked to the market, sending Ashanti's American depositary receipts 11 percent higher to $7.75.
The companies confirmed they were talking about a proposed merger at a ratio of 26 AngloGold shares for every 100 Ashanti ordinary shares or global depositary securities, valuing Ashanti at $1 billion
.
A successful merger would re-establish AngloGold as the world's largest gold producer after it was knocked off its pedestal by North American rival Newmont Mining, which won the arm wrestle with AngloGold for Normandy Mining.
If completed, the merger would give the enlarged AngloGold an expected production of about 7.6 million ounces in financial 2003 and 8 million ounces in 2004, putting it a step ahead of Newmont's expected production of 7.1 million ounces this year.
But AngloGold and Ashanti stressed that the "discussions may or may not lead to a proposal being made for the entire issued share capital of Ashanti".
Lonmin, the London-based mining firm that announced it had recruited South African Brian Gilbertson to guide the company through diversification and empowerment waters, also acknowledged it was in talks with AngloGold over the sale of its 28 percent stake in Ashanti.
But the firm has not yet detailed its future commodity play and it may find AngloGold's offer too cheap or want to hold on to gold as part of its new diversified portfolio.
AngloGold gained R5.75 to close at R239.55 yesterday.
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