Battle for Normandy gets fierce


Anglo chief Bobby Godsell won't rule out extending his company's bid for Normandy

By Grant Holloway
CNN

SYDNEY, Australia (CNN) -- The intense battle for Australia's largest gold miner, Normandy Mining, is coming to a beachhead, as the difference between two rival offers narrows.

The appeal of South African-based AngloGold's bid for the company, scheduled to close this Friday, is improving daily as the share price of U.S.-based rival Newmont Mining declines.

AngloGold is offering 2.15 of its own shares, plus A$0.30 cash for every 100 Normandy shares. Newmont has bid 3.85 of its shares and A$0.50 cash per 100 shares on the table.

The Normandy board of directors recommended late last week that its shareholders accept the Newmont bid. That values the company, based on Wednesday's U.S. share prices, at A$1.875 per Normandy share.

The AngloGold bid currently values the company at A$1.837 a share, or around $2.2 billion (A$4.1 billion) for the company.

Other complications abound

The exact values of the total bids varies from day to day, as the prices of the three companies change.

But there are other complications. Newmont's offer is conditional and is part of a three-way package in which it said it would also buy Toronto-based Franco Nevada Mining Corp.

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

With AngloGold's share price on the rise and Newmont's in a slump, it seems likely AngloGold may decide to extend its offer for Normandy past the Friday expiry date.

AngloGold CEO Bobby Godsell in currently in Australia and has not ruled out a bid extension. But he says a higher offer isn't warranted.

Anglo has already twice lifted its bid for Normandy, while Newmont has upped its offer once.

In a letter to Normandy shareholders on Wednesday, Godsell said the 5 cent gap per share between the two bids was not enough to warrant choosing the Newmont bid ahead of AngloGold's.

Value for money

Godsell emphasized the conditional nature of Newmont's bid and suggested the delay in Newmont paying shareholders, and the volatility of its share price, made its bid a far riskier option.

Normandy shares were trading 4 cents higher at A$1.87 a share in afternoon business on the Australian Stock Exchange on Thursday.

Australian gold and mining companies have been an attractive target for corporate predators because of the low Australian dollar.

That has been trading around the $0.50 to $0.52 range to the U.S. dollar for more than a year.

Another South African company, Harmony Gold, is bidding for Australia's Hill 50 Gold. The target's shares were 1 cent firmer at A$1.44 a share in afternoon business.

The recent takeover activity has been a boon for the Australian mining index of late. The index was 15.4 points, or 2 percent, higher at 783.40 on Thursday.