Australia’s Northern Star Resources has rejected an unsolicited A$38.7 billion, approximately $27.1 billion, takeover proposal from South Africa’s Gold Fields that would have created the world’s second largest gold producer behind Newmont, according to CNBC Africa. The proposal, submitted on September 14, offered Northern Star shareholders 0.3125 new Gold Fields shares plus A$7.25 in cash for each Northern Star share. Northern Star’s board unanimously rejected the approach, saying the proposal materially undervalued its portfolio and was made at an opportunistic time. Gold Fields said it remains focused on constructive engagement with the Australian miner’s board.
The proposed combination would have created a gold producer with annual output of about 4.1 million ounces, with approximately 80% of production coming from Australia, North America and Chile. Gold Fields estimated that the transaction could generate between $4 billion and $5 billion in corporate, operational and portfolio optimisation synergies. The deal would also have given Northern Star shareholders about 33% of the enlarged Gold Fields group and created a secondary listing on the Australian Securities Exchange. Both companies have significant operations in Western Australia, including around Kalgoorlie, where Northern Star operates the Super Pit, Australia’s largest gold mine.
The rejection comes amid a broader wave of consolidation across the global gold mining industry as producers seek longer life reserves, greater operating scale and lower costs. Gold Fields has argued that combining the companies would create a more diversified producer with significant exposure to high quality mining jurisdictions and substantial operational synergies. Northern Star, however, has raised concerns about the heavy share component of the proposal and the jurisdictional risk associated with Gold Fields stock. The bid had initially implied A$27 per Northern Star share, but the value had fallen to A$25.19 by September 25 as Gold Fields’ share price declined, reducing the premium to about 14%.
