=DJ WRAP: Normandy Bid Battle Down To Wire, Godsell Flies In
07 Jan 02:33
By Andrew Trounson
OF DOW JONES NEWSWIRES
MELBOURNE (Dow Jones)--The battle for control of Australia's largest gold
miner Normandy Mining Ltd. (A.NDY) is set to go down to the wire as continued
share price weakness in recommended suitor Newmont Mining Corp. (NEM) casts
doubt over the outcome.
Underscoring the closeness of the battle, Bobby Godsell, chief executive of
South African-based rival suitor AngloGold Ltd. (AU), flew into Sydney on
Monday in a last-ditch effort to woo shareholders. Passing him in the corridors
will be Newmont's Chief Financial Officer Bruce Hansen, who flew into Sydney on
a similar mission Friday.
Godsell is due to host a press conference Tuesday, raising speculation that
AngloGold may have one last card to play, though it is unlikely to be a
straight increase in its offer to match Newmont's higher bid.
Instead there is speculation Godsell could reveal further details of a
proposed alliance with Canadian major Barrick Gold Corp. (ABX), outlining more
clearly the value offered by the alliance.
At stake is Newmont's plan to create the world's largest gold producer
through a three-way merger plan with Normandy and Canada's Franco-Nevada Mining
Corp. (T.FN), which owns 19.9% of Normandy.
Failure for AngloGold would leave the South African company still seeking to
diversify away from its politically risky home base in search of an upward
rerating of its shares.
As it stands Newmont remains in poll position, its share-and-cash bid valuing
Normandy at A$1.89 a share, or A$4.2 billion, 5 cents ahead of AngloGold's
combined share-and-cash offer. That's down from a more comfortable 12-cent
buffer when Newmont announced the revised offer last week.
Normandy shares closed 1 cent lower Monday at A$1.85.
Newmont's bid has the backing of Normandy's board, and the U.S. company has
the additional advantage of what is in effect a call option over
Franco-Nevada's stake in Normandy.
But AngloGold's bid has the attraction of being unconditional and offering
fast payment, whereas Newmont's offer is conditional on winning a minimum of
50.1% of Normandy. Newmont also still needs various regulatory approvals,
including that of Australia's Foreign Investment Review Board.
In addition there is the prospect of participating in AngloGold's latest
dividend payment expected to be announced by the end of the month and which,
according to some analysts, could be worth up to 3 cents a Normandy share.
Arbitrageurs Key To Outcome
But key to the outcome will be how the host of arbitrageurs that have bought
into Normandy react. Arbitrageurs are believed to hold around 35% of Normandy.
Newmont will be hoping that its higher offer, plus its greater liquidity,
which allows speculators to exit more easily, will get it over the line. But
the faster timing of AngloGold's bid could attract speculators facing such
time-sensitive pressures as borrowing costs.
After accounting for the AngloGold dividend and the borrowing costs of
arbitrageurs, some analysts believe the difference between the two bids is
marginal and the outcome too close to call.
But as the two bids now stand, Newmont is the more likely winner, Daiwa SMBC
resources analyst in Melbourne, Mark Pervan, told Dow Jones Newswires.
"I think at this stage the margin is just too great for AngloGold to get
across the line," Pervan said.
Both companies have stepped up their newspaper advertising campaigns, with
AngloGold reiterating that it can see "no basis upon which it could justify a
further increase in its offer."
That leaves the Barrick alliance as Godsell's last obvious card. But to date
the details of the alliance have remained sketchy and hypothetical.
Under the proposed alliance AngloGold would offer Barrick management control
of Australia's largest gold mine, the Super Pit in Western Australia. The mine
is an equal joint venture between Normandy and Barrick.
In addition, AngloGold is proposing to offer Barrick a stake in an expansion
of the Boddington gold mine in Western Australian in which AngloGold holds 33%,
rising to 77% following the acquisition of Normandy.
AngloGold has claimed such an alliance would deliver "substantial additional
synergies." |
