LONDON, Sept 4 (Reuters) - With his ambitious bid for Ghana's Ashanti Goldfields in the balance, Randgold Resources RRS.L chief Mark Bristow could come under pressure to detail his takeover pitch as he visits U.S. investors this week.
A cool response from investors in the UK suggests Bristow could face an uphill challenge in selling a takeover which would double Randgold's size. But people close to the situation say Randgold shouldn't be ruled out just yet.
Randgold started a battle for Ashanti AGC.GH when it proposed a $1.46 billion all-share offer last month, to vie with a $1.1 billion bid, also in shares, from South Africa's AngloGold ANGJ.J , the world's second largest gold producer.
Even though Randgold has not yet submitted a formal offer, Ashanti's investors have so far been lukewarm to a proposal which would catapult Randgold to a leading position among gold producers.
Their biggest concerns are Randgold's smaller size -- it has a market value of about $590 million compared to Ashanti's $1.2 billion -- its relative lack of experience operating gold mines and its limited $100 million cash pile.
Bristow is well aware of the skepticism, but he believes shareholder interest is growing.
"I think the information's getting around. I can honestly say there's no-one I've met that's not been receptive to the story," the told Reuters.
Yet investors feel they still didn't have enough information about its strategy for an enlarged group to decide whether to accept a bid.
"It was nice to meet him and we discussed things in general terms. But there was no detail and I don't think we've got to a stage yet where we're going to make a decision one way or the other," said one UK shareholder who asked to remain nameless.
Another major shareholder said: "He put to bed a number of the balance sheet issues we had thought about...But I don't think either of the situations (bids) is clear."
CREDIBLE ALTERNATIVE
A U.S.-based Ashanti investor mirrored the wary view, saying Randgold had not so far proved itself to be a credible bidder.
"If they brought some sort of significant financing to the table, that would change the picture quite a bit. But we haven't seen anything like that," the investor told Reuters.
More details may emerge this week and next, when Bristow hits the streets in Boston, New York and Toronto to talk to Randgold and Ashanti investors.
Despite the investor jitters, other people close to the situation say Randgold shouldn't be ruled out just yet.
"I think Mark (Bristow) will come across as a credible alternative," said Mike Jones, an analyst with Canaccord Capital in London. "I think AngloGold is underestimating him."
Jones does not own Randgold shares and Canaccord does no investment banking for the company.
A senior banking source close to the deal agreed.
"If we were in west Europe, they wouldn't stand a chance, but in the African context, they do stand a chance," the source said, noting that under Randgold's bid, the Ghanaian government and other investors would retain a 70 percent stake of the merged group, whereas their stake would be greatly diminished under AngloGold's offer.
"They're offering a different option," the source said. "AngloGold's is a takeover, but Randgold's is more of a merger. It's not a sale really, the Government wouldn't really have to exit at all."
The battle will heat up when Randgold submits a formal offer, expected in a few weeks when Randgold and Ashanti have finished sifting through each other's financial books.
