Harmony shareholders OK takeover

Shareholders of Harmony Gold (HMY-N) have overwhelmingly approved their company’s plan to take over larger rival Gold Fields (GFI-N). In all, 87.7% of the shares voted at the company’s general meeting were in favour of the deal. Harmony says around 85% of its shares were represented at the meeting.

The company also says that it has received a discretionary proxy for the 67 million shares represented by its American Depositary Receipts, all of which were voted in favour of the proposed resolutions.

"Harmony shareholders have clearly recognised this potential value and have demonstrated their overwhelming support for the proposed merger," said Harmony chief executive Bernard Swanepoel in a prepared statement. "We are confident that Gold Fields shareholders, who will hold approximately 66% of the enlarged group and therefore benefit substantially from the value unlocked by this transaction, will do likewise.”

Harmony needed 75% of its shareholders to approve the plan, which will involve increasing its authorized share capital by 750 million shares to 1.2 billion shares. At the offer’s exchange rate of 1.275 Harmony shares for each Gold Field share, Harmony would need to issue nearly 627 million new shares.

In a subsequent news release, Gold Fields chief executive Ian Cockerill said: that the vote outcome was "not a surprise as Harmony’s financial position had left its shareholders with little choice other than to support the company’s hostile and coercive takeover bid to acquire the more valuable Gold Fields’ assets."

"Harmony is trying to solve its financial problems at the expense of our shareholders. They desperately need our cash to service their debt. Whichever way you look at the Harmony offer, Gold Fields shareholders stand to lose," he added.

Gold Fields again reiterated its advice that its shareholders not tender their shares to Harmony’s offer.

Gold Fields shareholders are scheduled to vote on their company’s own plan to merge its assets outside the “Southern African development community” with those of Iamgold (IMG-T) on Dec. 7. Harmony’s bid hinges on a rejection of that plan.

Harmony’s bid expires Nov. 26.