...Ashanti Accepts $1.09 Bln Takeover Bid
South Africa-based AngloGold on Monday night unveiled a near-$1.1bn agreed bid for Ashanti Goldfields of Ghana, a deal that would allow it to topple Newmont Mining as the world's biggest gold producer.
AngloGold, a unit of mining giant Anglo American, said the deal had the backing of London-based Lonmin, which holds almost 28 per cent of the equity. However, it awaits the approval of Ghana's government, which holds just under 17 per cent.
"This deal absolutely depends on the support of the government, both as a shareholder and as a regulator," said Bobby Godsell, AngloGold chief executive. "But, to do full justice to its potential, Ashanti needs a full partner and we believe we are that partner," he said.
The government of Ghana, which has appointed a group of advisers led by Soci?t? G?n?rale to assess the bid, is expected to clarify its position by the middle of next month.
AngloGold is offering holders of one Ashanti ordinary share or global depositary receipt 0.26 AngloGold shares or American depositary receipts, representing a 4 per cent premium based on August 1 closing prices. The offer represents a 12 per cent premium on the May 15 close, prior to the announcement of talks. The deal values Ashanti at $1.089bn.
The deal would create a producer with mines in South Africa, Namibia, Zimbabwe, Tanzania, Mali, Ghana, Guinea, Australia and North America. About 80 per cent of production would come from Africa.
Approval of the deal would diversify AngloGold away from its base in South Africa, where investors have grown increasingly concerned over mining ownership legislation aimed at boosting the role of black ownership, and over the strength of the South African rand.
The combined company would have annual pro forma output of about 7.3m ounces of gold, slightly ahead of Denver-based Newmont and 27 per cent ahead of AngloGold on a standalone basis. The deal, which Mr Godsell referred to as a partnership rather than an acquisition, would create a group with 93.2m ounces of proven and provable reserves.
Sam Jonah, Ashanti chief executive and the most powerful black executive in African mining, would join the board of the merged group and play a role in the executive management, AngloGold said. "He will share with me the strategic leadership of the company," said Mr Godsell.
Ashanti's board and the largest shareholder Lonmin Plc, the world's No. 3 platinum miner, agreed to the offer, Johannesburg- based AngloGold said. AngloGold in May offered 26 of its shares for every 100 shares in Ghana-based Ashanti.
Buying Ashanti would help AngloGold Chief Executive Bobby Godsell boost reserves by 31 percent and cut $15 million a year of costs. AngloGold was the world's top gold producer until last year when it lost out to Newmont in a battle for Australia's Normandy Mining Ltd. The purchase would lift the company's output back to within 1 percent of its rival.
``AngloGold feels comfortable to invest in areas such as Ghana and the financial returns are more attractive than investing in highly competitive areas such as Australia,'' said Helmut Engelhard, who helps manage the equivalent of $400 million at Challenger Portfolio Management Ltd. in Perth. ``They've been looking to expand outside South Africa. There are cost pressures there now.''
The companies expect to hear by mid-September whether the Ghanaian government will accept the offer. Ghana owns 17 percent of Ashanti, Africa's fourth-largest gold producer, and a ``golden share'' giving it a right to veto management changes. The government appointed a team of advisers, led by Societe Generale SA.
Gilbertson
London-based Lonmin, which owns 27.6 percent of Ashanti, hired former BHP Billiton Chief Executive Brian Gilbertson in May to advise on growth opportunities as it studies diversifying outside platinum. BHP Billiton is the world's biggest mining company ahead of Anglo American Plc, AngloGold's 51.4 percent- shareholder.
``Ashanti brings to AngloGold a portfolio of complementary top-tier, low-cost and long-life gold mines, as well as attractive exploration opportunities in one of the key gold- producing regions of the world,'' Godsell said in a statement to the Australian Stock Exchange.
AngloGold Chairman Russell Edey will be chairman of the combined company, to be called AngloGold Ashanti Ltd. Ashanti Chief Executive Sam Jonah will become president of the new company, sharing responsibility for strategy with CEO Godsell.
Currency
Expanding outside South Africa, which accounts for more than half AngloGold's output, may help the company weather a surge in the nation's currency that's hurting profit. AngloGold last week said second-quarter profit fell by almost a fifth from the first quarter after the rand and other currencies gained against the U.S. dollar. The South African currency averaged 8.1 percent higher during the period.
``Diversity helps to bolster you against the shifting currency trends,'' Challenger's Engelhard said. ``If you don't have a leg in many producing areas you face some pressure on your overall profitability. The rising rand has made their profit less in U.S. dollars.''
Gold prices rose more than 13 percent in the past year and AngloGold expects further gains. Gold for immediate delivery traded at $349.65 an ounce at 12:09 p.m. Sydney time. Newmont President Pierre Lassonde said yesterday the metal may surge as high as $450 an ounce in the next 12 months.
Buying Ashanti would increase AngloGold's output to about 235 metric tons, based on 2002 figures from Gold Fields Minerals Services Ltd. Denver-based Newmont produced 237.4 tons. Lassonde said yesterday Newmont has no immediate plans to make a rival bid for Ashanti.
AngloGold shares yesterday closed unchanged in Johannesburg at 240 rand. AngloGold shares in Australia were unchanged today at A$10.
CIBC World Markets is advising Ashanti. UBS Investment Bank and First Africa Group Holdings are advising AngloGold.
...Ashanti Accepts $1.09 Bln Takeover Bid
South Africa-based AngloGold on Monday night unveiled a near-$1.1bn agreed bid for Ashanti Goldfields of Ghana, a deal that would allow it to topple Newmont Mining as the world's biggest gold producer.
AngloGold, a unit of mining giant Anglo American, said the deal had the backing of London-based Lonmin, which holds almost 28 per cent of the equity. However, it awaits the approval of Ghana's government, which holds just under 17 per cent.
"This deal absolutely depends on the support of the government, both as a shareholder and as a regulator," said Bobby Godsell, AngloGold chief executive. "But, to do full justice to its potential, Ashanti needs a full partner and we believe we are that partner," he said.
The government of Ghana, which has appointed a group of advisers led by Soci?t? G?n?rale to assess the bid, is expected to clarify its position by the middle of next month.
AngloGold is offering holders of one Ashanti ordinary share or global depositary receipt 0.26 AngloGold shares or American depositary receipts, representing a 4 per cent premium based on August 1 closing prices. The offer represents a 12 per cent premium on the May 15 close, prior to the announcement of talks. The deal values Ashanti at $1.089bn.
The deal would create a producer with mines in South Africa, Namibia, Zimbabwe, Tanzania, Mali, Ghana, Guinea, Australia and North America. About 80 per cent of production would come from Africa.
Approval of the deal would diversify AngloGold away from its base in South Africa, where investors have grown increasingly concerned over mining ownership legislation aimed at boosting the role of black ownership, and over the strength of the South African rand.
The combined company would have annual pro forma output of about 7.3m ounces of gold, slightly ahead of Denver-based Newmont and 27 per cent ahead of AngloGold on a standalone basis. The deal, which Mr Godsell referred to as a partnership rather than an acquisition, would create a group with 93.2m ounces of proven and provable reserves.
Sam Jonah, Ashanti chief executive and the most powerful black executive in African mining, would join the board of the merged group and play a role in the executive management, AngloGold said. "He will share with me the strategic leadership of the company," said Mr Godsell.
Ashanti's board and the largest shareholder Lonmin Plc, the world's No. 3 platinum miner, agreed to the offer, Johannesburg- based AngloGold said. AngloGold in May offered 26 of its shares for every 100 shares in Ghana-based Ashanti.
Buying Ashanti would help AngloGold Chief Executive Bobby Godsell boost reserves by 31 percent and cut $15 million a year of costs. AngloGold was the world's top gold producer until last year when it lost out to Newmont in a battle for Australia's Normandy Mining Ltd. The purchase would lift the company's output back to within 1 percent of its rival.
``AngloGold feels comfortable to invest in areas such as Ghana and the financial returns are more attractive than investing in highly competitive areas such as Australia,'' said Helmut Engelhard, who helps manage the equivalent of $400 million at Challenger Portfolio Management Ltd. in Perth. ``They've been looking to expand outside South Africa. There are cost pressures there now.''
The companies expect to hear by mid-September whether the Ghanaian government will accept the offer. Ghana owns 17 percent of Ashanti, Africa's fourth-largest gold producer, and a ``golden share'' giving it a right to veto management changes. The government appointed a team of advisers, led by Societe Generale SA.
Gilbertson
London-based Lonmin, which owns 27.6 percent of Ashanti, hired former BHP Billiton Chief Executive Brian Gilbertson in May to advise on growth opportunities as it studies diversifying outside platinum. BHP Billiton is the world's biggest mining company ahead of Anglo American Plc, AngloGold's 51.4 percent- shareholder.
``Ashanti brings to AngloGold a portfolio of complementary top-tier, low-cost and long-life gold mines, as well as attractive exploration opportunities in one of the key gold- producing regions of the world,'' Godsell said in a statement to the Australian Stock Exchange.
AngloGold Chairman Russell Edey will be chairman of the combined company, to be called AngloGold Ashanti Ltd. Ashanti Chief Executive Sam Jonah will become president of the new company, sharing responsibility for strategy with CEO Godsell.
Currency
Expanding outside South Africa, which accounts for more than half AngloGold's output, may help the company weather a surge in the nation's currency that's hurting profit. AngloGold last week said second-quarter profit fell by almost a fifth from the first quarter after the rand and other currencies gained against the U.S. dollar. The South African currency averaged 8.1 percent higher during the period.
``Diversity helps to bolster you against the shifting currency trends,'' Challenger's Engelhard said. ``If you don't have a leg in many producing areas you face some pressure on your overall profitability. The rising rand has made their profit less in U.S. dollars.''
Gold prices rose more than 13 percent in the past year and AngloGold expects further gains. Gold for immediate delivery traded at $349.65 an ounce at 12:09 p.m. Sydney time. Newmont President Pierre Lassonde said yesterday the metal may surge as high as $450 an ounce in the next 12 months.
Buying Ashanti would increase AngloGold's output to about 235 metric tons, based on 2002 figures from Gold Fields Minerals Services Ltd. Denver-based Newmont produced 237.4 tons. Lassonde said yesterday Newmont has no immediate plans to make a rival bid for Ashanti.
AngloGold shares yesterday closed unchanged in Johannesburg at 240 rand. AngloGold shares in Australia were unchanged today at A$10.
CIBC World Markets is advising Ashanti. UBS Investment Bank and First Africa Group Holdings are advising AngloGold.
Copyright © 1994 - 2024 GhanaWeb. All rights reserved.
