Melbourne: South African gold producer Gold Fields has approached Australia’s Northern Star Resources with a proposed A$38.7 billion ($27.1 billion) takeover, in what could become one of the biggest transactions in Australia’s mining sector. Northern Star confirmed on September 28 that its board had rejected the unsolicited proposal.
Under the proposal, Northern Star shareholders would receive 0.3125 new Gold Fields shares plus A$7.25 in cash for each Northern Star share. The proposal valued Northern Star at about A$27 per share when it was submitted on September 14.
Gold Fields said it had held discussions with Northern Star over the previous six months and remained interested in engaging with the Australian company’s board. Northern Star, however, rejected the proposal, citing concerns including the value of the offer and exposure to the jurisdictional risks associated with Gold Fields’ shares.
The approach comes as Northern Star faces pressure from activist investor Elliott Investment Management, which has previously pushed the company to undertake a strategic review that could include a sale or asset divestments. Northern Star has also faced operational challenges, including issues at its Kalgoorlie processing operations.
A successful combination would significantly expand Gold Fields’ Australian operations and create a gold producer that Reuters says would rank as the world’s second-largest gold producer after Newmont. Gold Fields has not indicated publicly that the rejected proposal is its final offer, leaving the possibility of further discussions or a revised approach.