Northern Star Resources has knocked back an unsolicited takeover offer from South African giant Gold Fields, calling it “highly opportunistic”.
Subiaco-based Northern Star on Monday responded to rumours of a takeover bid by revealing it has received, considered and ultimately rejected Gold Fields’ offer, which was lobbed on September 14.
The suitor had offered 0.3125 new Gold Fields shares plus $7.25 in cash for each share held.
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That implied a consideration price of $27 a share — a 22 per cent premium to Northern Star’s close prior to the offer being tabled — and valued the Kalgoorlie Super Pit owner at almost $39 billion.
Northern Star’s board said Gold Fields’ proposal materially undervalued the company “and does not reflect the fundamental value of its tier-1, long-life asset base in low-risk jurisdictions or the growth profile of the portfolio”.
“(It) is highly opportunistic, having been made ahead of near-term value catalysts for Northern Star, including the commissioning and ramp-up of the Fimiston mill and the commencement of the incoming managing director and chief executive officer, Suresh Vadnagra,” Northern Star stated on Monday.
The board was also opposed to several “onerous” conditions.
“Gold Fields has sought to acquire one of the world’s premier gold portfolios at a price that falls well short of what the board considers to be its fundamental value and at a highly opportunistic time,” chair Michael Chaney said.
“Furthermore, Gold Fields has asked our shareholders to take nearly three-quarters of the consideration in Gold Fields stock, which carries a meaningfully higher jurisdictional risk profile than the exposure they hold today.
“These factors, in conjunction with the conditionality of the indicative proposal, are the basis on which the board has unanimously rejected the indicative proposal.”
Gold Fields has four mines in WA’s Goldfields region — Agnew, Granny Smith, Gruyere and St Ives — making it the most important jurisdiction within the South African giant’s global portfolio, which is spread across six countries.
The vast majority of Northern Star’s production also comes from the Goldfields.
Sweeping changes at Northern Star began in May, when the exit of then chief executive Stuart Tonkin was first flagged following a series of production downgrades that wiped billions of dollars from the miner’s value.
A $1.7b expansion of the Fimiston mill at the Super Pit was also plagued by cost creep.
Mr Vadangra will just be getting his feet under the table when Mr Chaney retires in November and his current deputy chair, Michael Ashforth, takes his place.
Amid the change, Florida-based hedge fund Elliott Investment Management popped up on Northern Star’s share register in June, calling for a complete leadership overhaul and a potential sale of the entire business.
Elliott pointed to Gold Fields and fellow international mining majors Agnico Eagle, AngloGold Ashanti and Newmont as the four likely suitors.
Northern Star rejected Elliott’s suggestion to shop itself around, sparking a public war of words between the two parties.
In an effort to restore peace with Elliott, which now holds a major stake of 6.2 per cent valued at $2b , Northern Star two weeks ago agreed to install two of its director picks — former Anglo American boss Mark Cutifani and Sydney-based mining engineer Peter Rozenauers to the board, both starting on Thursday.
Northern Star’s shares have tumbled 9.5 per cent so far this year, valuing it at $31.5b.
