Gold Fields' CEO plays down prospect of higher Northern Star offer
GFI•Gold Fields CEO Mike Fraser played down the prospect of a higher offer for Northern Star, saying the target first needs to acknowledge a potential path to a tie-up. Northern Star rejected Gold Fields' A$38.7 billion ($27.1 billion) proposal, which Gold Fields said could generate $4 billion to $5 billion in synergies.
1. Offer remains rebuffed
Gold Fields CEO Mike Fraser said the company was not hearing from Northern Star that it saw a pathway to value from a merger, and said that acknowledgment would be needed before Gold Fields considered making a new offer. Northern Star said its board would engage on proposals that represented value above what it believed it could generate as a standalone company, but that Gold Fields' proposal did not meet that standard.
2. Investors weigh merger
Gold Fields proposed A$38.7 billion ($27.1 billion) in cash and shares last month for Northern Star, aiming to create the world's second-biggest gold producer. Gold Fields has said the deal could deliver $4 billion to $5 billion in synergies, mostly through tax benefits and combining operations in Western Australia.
3. Valuation and concerns
Fraser said Gold Fields' largest shareholder, Public Investment Corporation, saw strategic logic in a merger but was concerned about cost escalation, Northern Star's turnaround plan and the risk of overpaying. He also said a combined company could trade at a higher relative multiple. Fraser said Gold Fields would walk away if the companies could not align on value creation.
