Gold Fields CEO plays down prospect of raising offer for Northern Star
GFI•Gold Fields CEO Mike Fraser said the company was not considering a higher offer for Northern Star without signs the Australian miner sees a path to a deal. 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. No sign of a path to a deal
Gold Fields CEO Mike Fraser played down speculation that the South African miner would raise its offer for Northern Star, saying the Australian company first needed to acknowledge a potential path to a tie-up. Northern Star said its board would consider proposals it believed offered more value than it could generate as a standalone company, but said Gold Fields’ proposal did not meet that standard.
2. Investors weigh merger rationale
Gold Fields proposed A$38.7 billion ($27.1 billion) in cash and shares last month. Fraser said Gold Fields’ South African shareholders saw the strategic logic of a merger, while some had concerns about costs, Northern Star’s turnaround and the risk of overpaying. He said Australian investors were buying into the merger rationale after discussions.
3. Synergies and valuation
Gold Fields has cited $4 billion to $5 billion in potential synergies, mostly from tax benefits and combining operations. Fraser said a combined company could trade at a higher relative multiple. Gold Fields’ shares have fallen nearly 17% since the day before its approach became public, while Northern Star’s have risen 10%.
