Harmony Gold Mining (HMY-N) will not increase its offer for Gold Fields (GFI-N), after South Africa’s Competition Tribunal gave conditional approval to a merger between the two companies. Harmony instead has made its original offer of 1.275 shares for one Gold Fields share unconditional, with an expiry date of May 20.
The announcement came with a hint that Harmony may back away from its present 11.5% shareholding in Gold Fields if it cannot get a large holding through the present bid. “We are considering our options on the Gold Fields stake,” said Bernard Swanepoel, Harmony’s chief executive. “We are not in the business of making non-strategic investments in other gold companies.”
The Tribunal, which oversees corporate-concentration issues in South Africa, ruled on May 10 that there was no reason to block the merger on competitive grounds, but that possible layoffs at the merged company had to be limited to 1,000 employees at or above the level of shift boss, and that no employees below that level could be laid off for two years.
Harmony had made cost savings a major selling point in its bid for Gold Fields and had conceded in hearings before the Tribunal that the 1,000-layoff limit would “considerably hamper” the plans.
Gold Fields said it planned to appeal the approval, asking for Harmony’s bid to be blocked entirely.
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