South Africa’s Competition Tribunal has dismissed Gold Fields‘ (GFI-N) request that it block the early settlement portion of Harmony Gold‘s (HMY-N) hostile takeover offer.
Gold Fields argued that the early portion of the bid is not separate from the subsequent offer for the remaining shares, and thus represents a single offer to acquire control. The company also said that if the early offer were in fact severable from the follow-on offer, it would still represent an acquisition of control, as Harmony would hold the majority of the votes at Gold Fields upcoming annual general meeting. Likewise, Gold Fields also claimed that Harmony’s irrevocable agreement with Norilsk Nickel, and its 20% stake in Gold Fields, gives the two control over Gold Fields.
The early settlement portion of Harmony’s offer targets 34.9% of Gold Fields shares, just short of the threshold for a full takeover offer under South African law. The bid stands at 1.275 of its own shares for each Gold Fields share. The bid includes a follow-on offer aimed at acquiring the balance of Gold Fields shares, provided that Gold Fields shareholders vote down their company’s plan to merge with Iamgold (IMG-T).
The Tribunal ruled that Gold Fields failed to provide satisfactory evidence to support any of its claims. The Tribunal did however warn Harmony and Norilsk of the serious legal penalties they would face should it be found they perjured themselves. Those penalties include “having to unwind a merger deceitfully implemented,” said the Tribunal. It also said the damage done to each company’s reputation would be incalculable.
“Gold Fields has been spectacularly unsuccessful in trying to frustrate Harmony’s offers through every possible legal and regulatory means in South Africa,” said Harmony’s CEO Bernard Swanepoel in a prepared statement. “It continues with litigation in the United States that we believe has no merit. One has to seriously question the objectives of the Gold Fields’ board. It appears that Gold Fields’ management do not understand their fiduciary duties.”
Gold Fields’ latest defeat follows separate losses at South Africa’s High Court and Securities Regulation Panel. Gold Fields plans to appeal all three decisions.
Meanwhile, the company is awaiting the ruling of the U.S. District Court for the Southern District of New York, where the company has filed a complaint alleging that Harmony has violated U.S. securities laws. Gold Fields wants the court to block Harmony’s offer until it provides shareholders with all material information about its offer and shareholders have had adequate time to digest that information.
Gold Fields contends that the early settlement portion of Harmony’s offer is unlawful, as the registration statement and other related documents filed with the U.S. Securities and Exchange Commission (SEC) are “misleading, inaccurate and omit material information about Harmony and its coercive two-step offer structure.”
Gold Fields shareholders are scheduled to vote on their company’s plan to merge with Iamgold on Dec. 7; Harmony’s bid hinges on a rejection of that plan.
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