CANBERA (dpa-AFX) - Northern Star Resources Ltd (NST.AX) announced that it has rejected an unsolicited, non-binding takeover proposal from Gold Fields (GFI,GFI.JO), concluding that the offer materially undervalued the company and exposed shareholders to additional risks.
The proposal, received on September 14, sought to acquire all outstanding Northern Star shares through a scheme of arrangement. Under the offer, shareholders would have received 0.3125 new Gold Fields shares and A$7.25 in cash for each Northern Star share.
Based on Gold Fields' closing share price on September 11, the proposal implied a value of A$27.00 per Northern Star share and an equity valuation of approximately A$38.7 billion. The offer represented a 22% premium to Northern Star's closing share price and a 15% premium to its 30-day volume-weighted average price at that time.
However, declines in Gold Fields' share price reduced the implied offer value to A$25.19 per share as of Sept. 25, lowering the implied equity valuation to about A$36.1 billion.
Northern Star noted that roughly 73% of the proposed consideration consisted of Gold Fields shares, with the remaining 27% in cash. Had the transaction proceeded, Northern Star shareholders would have owned about one-third of the combined company.
The board unanimously rejected the proposal, stating that it failed to adequately reflect the value of Northern Star's portfolio of long-life, tier-one gold assets in low-risk jurisdictions and overlooked the company's growth prospects.
Directors also expressed concerns over the large share component of the offer, which would expose shareholders to operational and jurisdictional risks associated with Gold Fields that they do not currently face.
In addition, the board described the approach as opportunistic, saying it arrived ahead of key value-creating milestones, including the commissioning and ramp-up of the Fimiston Mill and the arrival of incoming Managing Director and Chief Executive Officer Suresh Vadnagra.
Northern Star further cited significant execution risks attached to the proposal. The offer was contingent on due diligence, regulatory approvals, Gold Fields shareholder approval, and a requested period of exclusive negotiations without a fiduciary-out provision.
The company said these requirements would create a prolonged period of uncertainty and carry material completion risk for shareholders.
Northern Star informed Gold Fields on September 25 that it did not consider further engagement regarding the proposal to be appropriate.
NST.AX was trading at A$24.10 up A$1.99 or 9.00%.
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