[miningmx.com] — Seven percent of Gold Fields is now in the hands of Mvelaphanda Resources, which has publicly said it wants to sell those 50 million shares, so it’s little wonder that the old chestnut of a takeover bid for Gold Fields has resurfaced.
The shares held by Mvela as of today (17 March) are just one of a number of strands that have come together at more or less the same time and fuelled a rumour that Gold Fields may be taken over and split up.
Gold Fields would not comment on market speculation, said company spokesman Willie Jacobsz.
Speculation is rife that a group or company with designs on Gold Fields could look to buy the 7% stake on offer from Mvela, who wants to sell the shares currently worth around R6bn or $600m to pay off debt and embark on its platinum strategy.
Mvela officials pointed out that Gold Fields has pre-emptive rights to those shares, effectively blocking a hostile party from sneaking in the back door.
“We have not been approached and we are looking at selling those shares via market routes like financial institutions,’ said Mvela’s head of investor relations James Wellsted.
Mvela has not disclosed its exit strategy for those Gold Fields shares or a time frame.
An option might be for a takeover group to pay such a hefty premium for those shares that Gold Fields can’t buy those shares, but that scenario is highly unlikely.
Gold Fields is trading around R117/share, shy of a 12-month high at R137.40 but off a year-low of R53.23, when it was arguably at its most vulnerable.
The second factor playing into the rumour mill is that Gold Fields CEO Nick Holland was seen meeting Harmony CEO Graham Briggs on Monday.
This triggered speculation that Harmony could have a role to play in a bid for Gold Fields, potentially being the buyer of the South African assets while the international assets went to the offshore predator.
Briggs denied the rumour outright.
“There’s no move from Harmony to do any merger or acquisition with Gold Fields. Nothing at all. There’s no company that is collectively doing something with us on Gold Fields,’ Briggs told Miningmx.
Harmony made a failed bid for Gold Fields in October 2005, in a battle that saw Bernard Swanepoel, then CEO of Harmony, lose a lot of his hard-won credibility in the market.
The name that came up in the latest rumour is Russia’s Polyus Gold, which has long been a source of intense speculation when it comes to possible takeovers of Gold Fields.
The third strand playing into the latest rumour is the approval granted by Russia’s Federal Anti-Monopoly Service last week for Mikhail Prokhorov to increase his stake in Polyus Gold to 75%.
The Moscow Times reported on Monday that a spokesman for Prokhorov said the Russian billionaire didn’t want the shares anymore. Prokhorov personally owns 30% of Polyus.
Prokhorov would need to stump up about $10bn to take over Gold Fields, including a reasonable premium to shareholders, one market source said, pointing out this would not be an impossible ask for one of Russia’s wealthiest men.
Prokhorov ranks number 40 of the Forbes list of global billionaires with a net worth of $9.5bn. He is the chairman of Polyus, Russia’s largest gold company. In May 2007, he set up the Onexim Group, a $17bn private equity fund.
Polyus played a critical role in the 2005 Harmony bid. It held 20% of Gold Fields and had given its support to Harmony’s plan, however, that fizzled out and Polyus eventually sold its Gold Fields shares.
The other speculation is that a North American company desperate for reserves could make a play for Gold Fields, which has plans to increase its international production to three million ounces in the next three to five years, making it a plump and attractive target.
Again, the thinking is that the North American company would keep the international assets and sell off the South African ones, given the reluctance by foreign companies to own deep-level mines in South Africa.
It’s an open question whether a bid for Gold Fields is completely unrealistic given that there are an increasing number of people calling for gold to rise to $2,000 or more from $916 at the moment. Now may just be the perfect time to snap up Gold Fields, but it is a pretty big gamble on the gold price.
