Injunction Halts Takeover Bid for Gold Fields Firm

A federal judge in New York Monday halted the $4.9-billion hostile takeover bid for Consolidated Gold Fields PLC, a British firm that generates half its income from U.S. subsidiaries.

U.S. District Judge Michael Mukasey issued a preliminary injunction that stalls the bid by Minorco S.A., a Luxembourg firm controlled by the Oppenheimer-DeBeers syndicate in South Africa. Gold Fields sought the injunction in its antitrust suit, which is part of the firm’s fight to stop the takeover.

Mukasey ruled that the takeover would give Minorco control of 32% of the world’s gold production and would likely violate U.S. antitrust laws.

“We’re still studying the opinion, but we expect that we will appeal the decision,” Jeremy Epstein, Minorco’s lead attorney, said. “We expect to ask the judge to stay the order pending appeal, and if he refuses, we’ll ask the appellate court to stay the order.”

The ruling prevents Minorco from implementing its takeover offer today. But a stay would allow the firm to buy more stock while the decision is appealed. Minorco already has a 29.9% stake in Gold Fields.

The fact that the takeover involves two foreign corporations does not mean that U.S. courts cannot block it. Mukasey said Minorco has enough business activities and contacts in the United States to make it subject to U.S. court jurisdiction.

He cited Minorco’s numerous investments in American companies, the fact that New York is the base for a third of the company’s board and the prospect of Minorco picking up even more U.S. companies through the merger.

Among Gold Fields holdings are ARC America in Irvine, a construction-materials firm, and a 49% stake in Newmont Mining Corp. in New York, this nation’s largest gold-mining firm.

Minorco has claimed that it intends to sell the Gold Fields interest in Newmont and another gold-mining subsidiary, Gold Fields of South Africa. It claims that such a sale would leave it with a 1.7% interest in world gold production.

But Gold Fields contends that Minorco already controls 20% of the gold market mainly through companies owned jointly with other partners or shareholders.

If no appeal is filed, the lawsuit would proceed toward trial on a permanent injunction, a long process that would benefit Gold Fields.

“If the choice is between being eaten alive tomorrow and having trial sometime in future, we prefer the latter,” Lewis Kaplan, the lead attorney for Gold Fields, said.

One Minorco lawyer said he was surprised by the court’s decision.

But of more concern to Minorco may be a decision by British officials on whether to open an investigation by the British Monopolies and Mergers Commission, an action that may take a year to complete and kill the takeover. A decision is expected by 7 this morning British time, a Gold Fields spokesman said.

Gold Fields also is awaiting a decision by President Reagan on whether he would act under a recently amended Defense Production Act by starting an investigation that could lead to a ban on any sale of U.S. assets to Minorco.