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Watchdog takes shine off Harmony bid Rob Rose -------------------------------------------------------------------------------- E-Mail article Print-Friendly Chief Reporter THE Competition Tribunal may have achieved what Gold Fields could not by forcing Harmony to reconsider whether to press ahead with its hostile bid to buy its larger rival or throw in the towel when the current offer closes on March 18. On Friday the tribunal said it would hold public hearings into the bid between May 3 and May 6 — only days before Harmony’s irrevocable undertaking of support from Gold Fields’ 20% Russian shareholder Norilsk Nickel expires. Harmony CEO Bernard Swanepoel said yesterday the tribunal’s decision was “a great disappointment” and would force his company to “apply our minds to whether to extend the offer” beyond its current March 18 expiry date. But Swanepoel said the eight-month gap between the announcement of the bid and the expected May competition hearings “made a mockery of SA’s takeover code”. Swanepoel said that most other countries would have cleared the regulatory hurdles months ago. “But in this country, it has taken eight months to reach this point, and is an indication of how inefficient this process has become.” Until now it was always likely that Harmony would ask permission from the Securities Regulation Panel to extend the offer past March 18 until it had obtained all regulatory approvals. Now it seems the tribunal’s decision may force it to throw in the towel. This is the single largest setback for Harmony’s hostile bid, as Harmony already bought 11,5% of Gold Fields a few weeks ago as part of an “early settlement offer”, and with Norilsk’s 20,3% potentially in the bag it only needs the support of another 18,5% of Gold Fields shareholders. But Norilsk will only tender its shares once Harmony has at least 30% of Gold Fields, and fund managers would typically not vote their shares until all conditions have been met, including the tribunal’s decision. Swanepoel said the offer had to remain open for at least three weeks after the tribunal had made a decision — by which time the Norilsk’s undertaking would have expired. However, all is not lost for Harmony, and Swanepoel said he would speak to Norilsk to see if they were amenable to renegotiate their undertaking. “There is no guarantee that we will be able to renegotiate the revokable with Norilsk. But I will talk with Norilsk in the next week to see what they say,” he said. Tribunal CEO Shan Ramburuth defended the body’s decision to hold the hearings in May. “Having taken into account all the views of those who want to participate and the need for a proper exchange of documents, this timeline is reasonable and fair,” he said. Among those who will have their say at the hearing are union groups representing employees of both companies, two West Rand municipalities, and a Gold Fields supplier. But Swanepoel said “this proves the only defence a company needs (to a hostile takeover) is delaying tactics (and) … this tribunal decision has worked to the advantage of Gold Fields’ delaying tactics significantly.” He said it would be “a travesty of justice” if Gold Fields shareholders were prevented from voting for or against this deal purely because of delays. “Throughout the offer Gold Fields management has spent considerable amounts of Gold Fields shareholders’ money on legal actions aimed solely at depriving its of the opportunity to decide for themselves on Harmony’s offers.” Gold Fields spokesman Willie Jacobz said the timetable “certainly benefits Gold Fields and all stakeholders who have an interest in presenting their cases to the tribunal … but it may only just extend this matter and not necessarily influence the outcome”. The hearings timetable will also mean Harmony’s results for the March quarter will be out before the April 25 hearings. Earlier this month the Competition Commission recommended the deal be approved, but said this was only on condition that a successful bid would not see Harmony cull any more than 1500 managerial posts.
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