Key facts
- Northern Star Resources rejected an unsolicited takeover proposal from Gold Fields.
- The offer from Gold Fields was valued at A$38.7 billion ($27.1 billion).
- Northern Star's board considers the offer to be opportunistic and below the company's fundamental value.
- The proposal was made on September 14 and has since decreased in value.
- Activist investor Elliott Investment Management holds approximately 5.6% of Northern Star.
- Northern Star and Gold Fields both have gold operations in Western Australia.
Australia's Northern Star Resources has rejected an unsolicited takeover bid from South Africa's Gold Fields, signaling ongoing consolidation pressures within the gold mining sector. The proposed deal, valued at A$38.7 billion ($27.1 billion), was deemed opportunistic and significantly undervalued by Northern Star's board.
Gold Fields submitted the offer on September 14, proposing that Northern Star shareholders receive 0.3125 new Gold Fields shares and A$7.25 in cash for each Northern Star share. However, Northern Star stated that the offer's value had fallen to A$25.19 per share by Friday, representing only a 14% premium over its last closing price, which is below the typical 30% premium sought in Australian corporate takeovers.
Northern Star Chairman Michael Chaney criticized the bid as an attempt to acquire a premier gold portfolio at a price well below its fundamental value, especially during a period of key growth catalysts for the company, including the ramp-up of its Fimiston Mill. The company also noted that the proposal carried higher jurisdictional risk compared to its own assets and included onerous conditions like a demand for exclusivity.
The rejection comes after activist investor Elliott Investment Management, which holds about 5.6% of Northern Star, had previously urged the company to conduct a strategic review that could lead to a sale. Elliott Partner John Pike stated that while the investor sees immense potential for value creation at Northern Star, the board has an obligation to engage with serious buyers. Shares of Northern Star rose 10.6% in early trading on Monday following the news, though they remained below the implied offer price.