Probe Into S. African Bid for Gold Giant Requested

Britain’s opposition Labor Party on Thursday demanded a government inquiry into a huge South African-backed takeover bid for British gold mining giant Consolidated Goldfields PLC as the stock exchange examined suspicions of insider dealing in its shares.

Luxembourg-based Minorco, which is 60% owned by South African Anglo-American Corp., and De Beers Consolidated Mines Ltd. on Wednesday made the biggest takeover bid in British business history, valuing Cons Gold at $4.9 billion. Cons Gold rejected the offer as “ludicrous,” but it appears that a bruising takeover battle is likely.

The left-wing Labor Party’s Trade and Industry spokesman, Tony Blair, said the Conservative government should call a Monopolies Commission inquiry into the takeover. If consummated, the takeover would marry the West’s biggest mining interests in an unrivaled conglomerate.

‘No Evidence’

Anglo-American Corp. is the world’s biggest gold mining firm, and De Beers dominates the West’s diamond market.

Minorco has investments amounting to about $3 billion, but it has acted until now largely as the overseas investment arm for the two South African giants, holding assets rather than directly managing them. Consolidated Gold holds 49% of New York-based Newmont Mining Corp., owner of the biggest U.S. gold mine.

A Minorco spokesman said his company had formally requested a stock exchange investigation into a rise in the value of Consolidated Gold stock before Wednesday’s bid.

“We haven’t got anything to go on, but it did not help the terms at which we had to bid,” he said.

“We have no evidence there was actually a leak, but we welcome finding out what the facts are,” said a spokesman for Morgan Grenfell & Co., merchant bankers to Minorco. “All we are saying is that there was a lot of dealing, and it seems to indicate the price contained a speculative element.”

Decision Made Tuesday

The London Stock Exchange said unusual volumes and price movements in Consolidated Gold shares had prompted “a routine investigation.”

Consolidated Gold stock rose by 40% to more than $25 Wednesday on news of the bid. Suspicions were aroused by earlier gains despite a fall in gold prices that would be expected to erode the value of gold stocks.

Minorco’s decision to launch the bid was made Tuesday at a board meeting in Luxembourg.

“I would have thought there is a very strong case for the government saying that this is a bid that should be looked at so that we can see what the implications are--the nature of the bid and the implications for U.K. industry,” the Labor Party’s Blair said in a radio interview.

“If we wish to encourage disinvestment in South Africa, here you have the largest-ever takeover bid mounted for a U.K. firm, from a firm effectively controlled by South African interests.”