Randgold ups Ashanti ante, omits cash (October 24, 2003)

True to its word Randgold Resources (GOLD-Q) has boosted its all-share offer for Ghanaian-based gold miner Ashanti Goldfields‘s (ASL-N).

Under the revised bid, Ashanti shareholders are offered 0.56 of a Randgold share (previously half a share) for each Ashanti share tendered. Based on the closing price of Randgold’s American Depository Receipts on the Nasdaq on Oct. 23, the offer is worth US$12.57 per share, or around US$1.7 billion in all.

Randgold says its offer represent a 10.3% premium over the closing price of Ashanti’s Ghanaian depository shares on Oct. 23, and a 12.3% premium over the current value of AngloGold‘s competing offer.

In a prepared statement, Randgold said it believes its revised offer, "represents a genuine and attractive alternative to the improved final offer proposed by AngloGold. There can be no guarantee that an agreement between Randgold and Ashanti will be reached or that the merger will be effected. Further announcements will be made in due course, as appropriate."

Randgold’s offer is conditional on, among other things, approval by at least 75% of Ashanti shareholders.

Ashanti’s board says it will evaluate the revised bid, while continuing to endorse AngloGold’s rival bid of 0.29 of one of its shares for every Ashanti shares. AngloGold called that bid, which recently replaced its original bid of 0.26 of a share, final.

In addition to the support of Ashanti’s board, AngloGold’s bid has the backing of platinum miner Lonmin (LNMIY-O), which owns a 27.6% stake in Ashanti. Also working against Randgold is the fact that Lonmin has also agreed not to accept or support any bid from Randgold unless it includes a fully underwritten cash alternative, something the new bid is lacking. Lonmin can also withdraw its support if Ashanti’s board puts its weight behind a competing offer.

Still, the government of Ghana, which has a 16.9% stake in Ashanti, holds the trump card a so-called “golden share” that affords it veto power over any deal that fundamentally changes Ashanti’s structure. Any proposed deal also needs the approval of the U.S. Securities and Exchange Commission and the Ghana High Court.

In the end, existing Ashanti shareholders would own around 72.6% of the enlarged company under the Randgold proposal; the AngloGold deal would leave them with a 14.5% stake. A tie up between Ashanti and Randgold would create a 2-million-oz.-per-year producer, compared with a 7.3-million-oz. behemoth with AngloGold.