Shares in Northern Star Resources rose after the Australian gold mining company announced it had unanimously rejected a takeover proposal from rival Gold Fields. The offer, initially received on September 14, valued the miner at A$38.7 billion, or approximately $27.15 billion, which represented a 22% premium over its closing price on September 11.
However, based on Gold Fields’ share price on September 25, the implied value of the deal had dropped to A$36.1 billion. In its rejection, Northern Star’s board stated that the proposal ‘materially undervalues’ the company and was ‘highly opportunistic.’
Northern Star Chairman Michael Chaney criticized the bid, stating that Gold Fields attempted to acquire one of the world’s leading gold portfolios at a price significantly below its fundamental value during a favorable market moment for the bidder. The miner also highlighted concerns regarding the structure of the deal, noting that the majority of the payment would come in the form of Gold Fields shares and that the offer was contingent on several conditions.
Northern Star informed Gold Fields on Friday that its board did not consider it appropriate to engage further in discussions regarding the proposal. Bloomberg had previously reported that Gold Fields had approached Northern Star about a potential acquisition.
Does this mean Gold Fields will make another offer, or is this the end of the road for now?
Good for Northern Star. They shouldn’t sell their prime assets just because the bidder thinks the market is hot.
Paid mostly in shares and contingent on conditions? Hard to call that a fair valuation when risks are so high.
Wait, the implied value dropped because their stock fell? That deal is falling apart already. Interesting timing.
A 22% premium just to be told no? Classic Gold Fields move. Northern Star knows its worth.