`Harmony bid undervalues Gold Fields` assets`
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The board of South African gold miner Gold Fields (GFI) says the bid by rival Harmony (HAR) `significantly
undervalues` Gold Fields` portfolio of assets and completely disregards the significant value that will be created from the IAMGold transaction.
The Board of Gold Fields on Tuesday urged shareholders to continue to support Gold Fields` stated strategy of pursuing the IAMGold transaction.
On Monday Harmony announced the terms of a proposed merger between it and Gold Fields, under which Harmony proposes to acquire the entire issued share capital of Gold Fields in exchange for the issue to Gold Fields shareholders of new shares in Harmony.
The proposed merger is conditional on the proposed IAMGold transactionnot proceeding and the approval of the proposed merger by Harmony shareholders.
In terms of the offer, Harmony is offering 1.275 Harmony shares for each Gold Fields share and ADS.
The offer values Goldfields at 52.9 billion rand or $8.1 billion based on the closing price of 84.41 rand per
Harmony share on the JSE Securities Exchange South Africa on 14 October.
The proposed merger ratio represents a premium of approximately 29% on the closing price.
Gold Fields shareholders were advised on Tuesday that the Board of Directors will consider the advice from its independent financial advisors, Goldman Sachs International and JPMorgan, and is currently forming its own view and recommendation regarding the Offer.
`The preliminary view of the Board of Directors however is that the Offer is not in line with Gold Fields` stated strategy or in the interest of Gold Fields` shareholders,` it said.
The Board of Gold Fields continues to firmly believe that the IAMGold transaction is in the best interests of shareholders as it provides an international platform for aggressive growth with full access to international debt and capital markets.
It unlocks the intrinsic value of Gold Fields` international assets and places control of a global growth vehicle firmly in South African hands.
The see through value of Gold Fields` International assets has increased by more than USD0.5bn from
announcement of the IAMGold transaction till Friday 15th October close, it said.
In addition, Gold Fields said the implied premium in the proposal, based on the closing price of Gold Fields` ADSs in New York on Friday 15 October was 7%.
The implied premium based on current trading levels is negligible.
Based on the Board of Gold Fields` perception of relative fundamental value the proposed exchange ratio vastly overvalues Harmony`s asset contribution to any potential combination.
Over the past year the cost per Kilogram performance of Harmony has significantly lagged that of Gold Fields, it added.
`The Board of Gold Fields therefore believes that the proposal significantly undervalues Gold Fields` high quality portfolio of assets and completely disregards the significant value that will be created from the
IAMGold transaction.
`The Board of Gold Fields urges shareholders to continue to support Gold Fields` stated strategy of pursuing the IAMGold transaction.
The views of the company`s independent financial advisors and of the Board of Directors will be made known to shareholders shortly, it concluded.
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