AngloGold Offers $2.3 Billion for Normandy to Boost Production by a Third
By Dudley White
Johannesburg, Sept. 5 (Bloomberg) -- AngloGold Ltd., the largest gold miner, offered to buy Normandy Mining Ltd. for A$4.4 billion ($2.3 billion) in stock and assumed debt, to boost output by a third and cut costs by adding mines outside South Africa.
AngloGold offered 2.15 of its shares for each 100 Normandy shares, valuing Australia's top gold miner at A$1.42 a share, 29 percent more than the closing price yesterday, it said. Normandy, which said it will consider the bid, had A$1.18 billion of long- term debt at the end of fiscal 2001.
The bid comes as the world's top gold producers look to boost output amid optimism prices may rise. AngloGold Chief Executive Bobby Godsell has been trying to increase profit by buying mines overseas and closing and selling mines in South Africa where costs are among the highest in the world.
``It's going to surprise a lot of people,'' said Nick Raffan, who helps manage A$1.9 billion at Zurich Scudder Investments in Sydney. ``I would have thought there were some major shareholders that might try to hold out for A$1.50 or maybe higher. But I think there will be some people who will rush at it.''
Normandy Chairman and Chief Executive Robert Champion de Crespigny said the company appointed Macquarie Bank Ltd. to assess the offer. Deutsche Bank AG is advising AngloGold which will have a market value of about $5.5 billion if the offer is accepted.
Logical Move
``AngloGold is one of the leading companies in this industry and its offer is a logical industry move,'' De Crespigny said in a statement to the Australian Stock Exchange. ``It is fair to say that the objectives AngloGold has in this offer are similar to the strategies we at Normandy have expressed for some time.''
De Crespigny will attend a press conference held by AngloGold in Melbourne at 5 p.m. local time. Anglo American Plc owns 53.3 percent of AngloGold.
Analysts speculated AngloGold and Normandy held merger talks last year. The bid comes amid increasing consolidation in the global gold industry.
Canada's Barrick Gold Corp. in June agreed to buy Homestake Mining Co. for $2.4 billion. Australia's Delta Gold Ltd. and Goldfields Ltd. have said they're in merger talks while Perth- based Sons of Gwalia Ltd. last month offered A$206.1 million for PacMin Mining Corp.
Franco-Nevada Corp. earlier this year agreed to acquire 19.9 percent of Normandy in exchange for cash and mines.
The acquisition would reduce AngloGold's production costs by 4 percent to $182 an ounce, the company said. It will also boost earnings before interest and tax to $891.5 million to $617.7 million. The increase in cash flow should ensure that AngloGold's practice of paying high dividends continues, it said.
Premium
``Most of the NPVs (net present value) I've seen for Normandy have been around 85 (Australian) cents to A$1.10 (per share),'' said Zurich's Raffan. ``The premium is not out of whack compared with recent takeovers in the gold sector. The 30 percent premium is in line.''
The combined company would have gold output of 9.1 million ounces a year. The acquisition would cut the percentage of AngloGold's production mined in South Africa to 49.5 percent from 67.4 percent, it said.
``The new company will have a more diverse production portfolio, with quality mining operations in four continents, and with a good balance between deep level, shallow and open pit operations,'' Godsell said in the statement.
Normandy owns a 50 percent stake in the Super Pit, Australia's biggest gold mine, located near Kalgoorlie in Western Australia state. Barrick earlier this year agreed to buy the other half through its takeover of Homestake.
The transaction is subject to approval by the South African Reserve Bank and Australia's Foreign Investment Review Board. |
