AngloGold gets Ghanaian government support

The Ghanaian government has thrown its weight behind the planned US$1.7-billion merger between Ashanti Goldfields (ASL-N) and AngloGold (AU-N).

The government has agreed to vote its 16.8% stake in the company in favour of the proposed deal and has committed to vote against any competing offer.

In return, AngloGold has agreed to nominate as directors two Ghanaian citizens recommended by the government. The company must also list the merged companies for trade on the Ghana Stock Exchange.

AngloGold and the government have also agreed to enter into a "stability agreement", pending parliamentary approval of the deal. The stability agreement outlines the government’s fiscal and regulatory responsibilities in light of its role as shareholder and regulator of Ashanti. The agreement protects the post-merger AngloGold Ashanti against increases in the royalty regime, taxes, duties and long-term mining lease.

AnlgoGold is offering 29 of its own shares for every 100 Ashanti shares. The deal will terminate if it doesn’t a get parliamentary nod by the end of July.

Ashanti shares were US30 higher at US$13.30 in late afternoon trading following the news in New York; shares in AngloGold were off US8 at US$46.98.