Judge Allows Sale of Shares in Newmont
A Delaware judge Monday stalled the takeover fight between Newmont Mining and T. Boone Pickens Jr., ruling that the company’s British ally may complete defensive purchases of 15.8 million Newmont shares but ordering the stock held inactive pending a hearing later this week.
Pickens, the well-known takeover strategist and Texas oilman, contends that the $1.5 billion worth of stock purchased by Consolidated Gold Fields last week illegally blocked his efforts to acquire a 51% stake in Newmont, an asset-rich mining giant that has been resisting him.
Stock speculators have focused on the Newmont-Pickens fight because of the possible implications for the “market sweep,” the tactic Consolidated used to quickly scoop up Newmont shares nationwide in an attempt to thwart Pickens.
The Securities and Exchange Commission has said it may outlaw market sweeps on grounds that they are unfair to shareholders because they don’t allow enough time to evaluate the offering price.
Pickens Holds 10%
In response to Pickens’ request, Chancery Court Vice Chancellor Jack B. Jacobs last week temporarily restrained Consolidated from purchasing more Newmont shares but left open the question of whether the 15.8 million shares it already had bought must be divested.
That stock gave Consolidated a 49.7% stake in Newmont, which is based in New York but incorporated in Delaware.
Ivanhoe Partners, a Pickens-led investment group, has a nearly 10% stake in Newmont and has offered to pay $72 a share for a majority stake as the first step in an eventual takeover.
Consolidated and Newmont argued that the purchases were legitimate. They also said reversing purchases on such a massive scale would cause havoc in the stock market.
In a written amendment to his order, Jacobs stated Monday that Consolidated could complete the purchases. However, Consolidated may not vote the stock or otherwise use it to change the situation pending a Thursday hearing on a preliminary injunction requested by Ivanhoe Partners.
“Only in that manner can the status quo be meaningfully preserved so as not to give either side an unfair advantage pending a preliminary injunction ruling,” Jacobs wrote.
Lewis A. Kaplan, attorney for Consolidated, had no comment on Jacobs’ amended order. Ivanhoe attorney Charles F. Richards did not return calls.
But both sides indicated last week that they would not oppose an order in which Consolidated was allowed to complete the purchases but required to hold them separately until the legal issues were resolved.
Jacobs also directed attorneys to consider how to divest the separately held stock, including allowing Ivanhoe and Consolidated to bid competitively for it.
