AngloGold slams Normandy rejection


AngloGold chief executive Bobby Godsell says he wants to be the most profitable gold producer, not necessarily the biggest

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- South Africa's AngloGold Ltd has condemned the rejection of its takeover bid by the board of Australian gold producer Normandy Mining, calling the board's response "potentially misleading".

Normandy, which is the subject of a higher competing bid by Denver-based Newmont Mining Corp., formally rejected AngloGold's offer late Monday.

In its counter-attack an hour after Normandy directors released their recommendation to the Australian Stock Exchange at 4.30 pm Monday, AngloGold said the value difference between the two offers was now "marginal".

It said the volatility in Newmont's share price meant there was a "real risk" the Newmont offer could be less than AngloGold's in four months' time, when shareholders were likely to receive their payments.

Last Wednesday Newmont said it wanted to buy Normandy and Toronto-based Franco-Nevada Mining Corp for a total of $4.41 billion in stock and cash.

Franco-Nevada is the largest shareholder in Normandy, with a 19.9 percent stake.

Largest gold producer

AngloGold, headed by Bobby Godsell, is the world's largest gold producer, while Newmont has extensive operations in the U.S., Canada, Mexico and five other countries.

As big resources companies jostle for position in the global push towards consolidation, producers such as Normandy are becoming attractive takeover targets.

Normandy directors on Monday urged shareholders to reject the AngloGold offer, made on September 5, saying an independent expert concluded the offer was neither "fair nor reasonable".

The directors said Normandy was well placed to generate further value for shareholders, even if the Newmont offer was unsuccessful. They said the AngloGold offer did not take into account Normandy's "development opportunities"

Normandy, based in Adelaide, is Australia's largest gold miner, producing more than 2 million ounces a year. The independent expert valued it at A$1.48 to A$1.88 a share.

Board prefers Newmont

Normandy's executive chairman Robert de Crespigny told the company's annual general meeting last Thursday that he and the other board members planned to accept the Newmont offer.

Newmont offered 0.0385 shares for each Normandy share, valuing Normandy at about $1.98 billion, or about A$1.65, based on Newmont's November 13 share price.

It said it would also pay A$0.05 in cash for each Normandy share if the offer is accepted by at least 90 percent of Normandy shareholders.

In its statement to the ASX, AngloGold said the Normandy response was "potentially misleading for Normandy shareholders" because of its continued reference to the Newmont offer being worth A$1.70 a share.

It said that since Newmont announced its offer, Newmont's share price had fallen "substantially", rendering the value difference marginal.

It said that based on Newmont's NYSE closing price last Friday, Newmont's offer valued Normandy at A$1.46, plus a potential extra 5 cents a share if there is 90 percent acceptance.

Little difference in value

"This compares with the current value of the AngloGold offer for Normandy of A$1.46 per share, also based on the closing share price on the NYSE on Friday," it said.

It claimed the Newmont offer was highly dilutive for Normandy shareholders, and there was no guarantee the three-way merger would be completed.

AngloGold CEO Bobby Godsell said the company was interested in producing high-margin profitable ounces, rather than being the world's largest gold producer.

Normany shares closed 1.96 percent higher on the ASX Monday at A$1.56, up 3 cents.