Newmont pushed to wall by gold-hungry Pickens

Analysts predicting that Newmont Mining Corp. would be pushed to the wall in its effort to stop Texas oilman T. Boone Pickens from taking control of the New York company, were proved correct this week.

In a series of moves and counter moves which resembled a corporate chess game, Newmont and its largest shareholder, Consolidated Goldfields of Gt. Britain organized to make an outside takeover bid impossible

The defensive strategy concluded at 3.30 p.m. on Tuesday when Consolidated Goldfields tried to buy up the outstanding shares needed to give it a 49% interest in the company and effectively scuttle the Pickens bid.

On Monday Newmont announced that it had signed a 10-year agreement with Consolidated Gold Fields to limit the company’s stake to less than a majority. To fight the takeover bid, Newmont also announced a special cash dividend of $33 a share. The dividend is to be paid as part of a restructuring aimed at enhancing shareholder value and focusing on its key gold business.

These efforts to stop Mr Pickens from obtaining a majority interest followed the oilman’s $105 per share bid from Ivanhoe for 28 million of Newmont’s 66.8 million outstanding shares. In addition to the 6.65 million shares which the investor group already owns these would have given it a 51% interest in the New York-based mining giant.

Two weeks ago Pickens-led Ivanhoe partners started the controversial takeover offer by offering $2.6-billion ($95US per share) for control of Newmont.

But even though the Texas-based corporate raider has failed, so far, to gain control of one of North America’s biggest gold producers, a New York analyst thinks he may not be finished yet.

“Like Fred C. Dobbs in the film Treasure of the Sierra Madre, Pickens has caught the gold bug,” said Peter Ingersoll a mining analyst with Shearson Lehman Securities in New York

To counter the Consolidated Goldfields move, Pickens cut his bid by about one third to $72 per share and filed a lawsuit against the company to stop it from buying up more Newmont shares.

The new bid values Newmont at $4.8 billion but since it comes with a $33 dividend payment, the extra debt incurred during the controversial takover bid, would still be covered.

Although analysts are unsure of what he will do next, Mr Ingersoll said this latest move is probably a face saving device which prevents Mr Pickens from being accused of “green mailing” when he goes to hand in his Newmont shares.

In its Mining Weekly, Shearson Lehman called the revised bid of $105 per share good value since it puts the shares on a price earnings ratio of 47 times 1987 earnings.