| Tue 28 Oct 2003, 9:08 | | Ashanti board still favours AngloGold bid |
|
Ashanti board still favours AngloGold bid
--------------------------------------------------------------------------------
Size, track record are advantage over Randgold
Resources Correspondent
THE board of Ashanti Goldfields has again recommended to shareholders that they accept AngloGold's offer for the Ghanaian gold company, rebuffing a sweetened offer from Randgold Resources which, at the time of the offer, came in at a 12,3% premium to the AngloGold bid.
Ashanti is at the centre of a takeover battle between Randgold Resources and AngloGold and its decision to continue recommending AngloGold's all-scrip offer may be the decisive move in the takeover battle, according to analysts.
"The game is over I think," said an analyst yesterday.
Randgold increased its offer on Friday, and the fact that the Ashanti board had wasted no time in saying it still backed the AngloGold offer made it clear that Randgold would have to come up with something very special for the board to change its mind, other analysts yesterday said.
AngloGold's offer expires on Friday, although the group might extend its bid again to allow the Ghana's government to give its view on the matter.
Randgold Resources CEO Mark Bristow said yesterday that the approval of any deal involving Ashanti was still dependent on approval from the government of Ghana. "We respect Ashanti's decision but it still has shareholders and regulators to satisfy," said Bristow.
As well as holding a stake of nearly 17% in Ashanti, the government of Ghana, which has hired investment bank Société Générale as an advisor, also has the right to veto any deal that fundamentally changes the structure of Ashanti, which is Ghana's biggest foreign currency earner.
"Our offer is still trading at a premium," said Bristow.
He suggested that Lonmin, which has agreed to deal only with AngloGold unless Randgold offers cash, had effectively stymied any auction which, in Bristow's view, could have more fairly reflected the value in Ashanti.
Lonmin, which is the biggest shareholder in Ashanti with a 27,6% stake, has made it clear it wants to sell its interest in Ashanti for AngloGold shares. Analysts say the logic behind this is that it will be easier to sell AngloGold shares for value.
In addition, AngloGold is much larger, so Lonmin would have fewer AngloGold shares to sell than it would if the Randgold offer was successful and the possibility of an overhang in the market, which could depress the share price, would be avoided.
"In reaffirming its decision, the board of Ashanti has considered carefully the revised Randgold proposal as well as, amongst other things, the results of the technical, legal and financial due diligence exercise undertaken on both AngloGold and Randgold, and has concluded that the revised AngloGold proposal remains in the best interests of Ashanti's stakeholders, including shareholders, employees and the people of Ghana," said Ashanti.
The Ashanti board, through its recommendation, was not necessarily looking for the highest offer, which would be to the advantage of short-term shareholders, according to analysts.
They said that because Ashanti had such a high political profile in the country and was of great importance to Ghana's economy, the board was compelled to back an offer from a company that had a proven track record in developing mines and a balance sheet that would be able to support that.
The Obuasi mine and ore body, being mined to a depth of 1500m, has reserves as deep as 3000m.
AngloGold's deep-level mining experience means these reserves can probably be accessed more quickly and efficiently as part of a combined AngloGold and Ashanti.
At the time of the original AngloGold offer Sam Jonah, the CE of Ashanti, said:"The immense technical and financial strengths of the new group will enable the realisation of the full potential of the Obuasi mine in the shortest possible time."
Bobby Godsell, CEO of AngloGold, said that in the next five years it was expected about $44m would be spent on exploration at Obuasi, while operating costs could be cut by $20 an ounce of gold produced. AngloGold estimated total capital expenditure for Obuasi Deep until 2040 and beyond at $570m.
AngloGold is offering 29 shares for every 100 Ashanti shares and Randgold 0,56 of its shares for every Ashanti share.
Oct 28 2003 07:19:42:000AM Julie Bain Business Day 1st Edition
Tuesday
28 October 2003
