Minorco Sweetens Bid for Mining Firm to $5.7 Billion

Minorco SA, making the largest offer ever for a British company, on Monday renewed its hostile bid for Consolidated Gold Fields PLC and sweetened the proposed buyout to $5.7 billion.

Consolidated Gold Fields, a British gold mining group, immediately rejected the long-awaited, renewed offer from Minorco, the investment arm of the South African Oppenheimer family’s mining empire.

“The board intends to resist the bid strongly,” said Consolidated Gold Fields Chairman Rudolph Agnew, who advised shareholders to take no action in response to the offer.

“This renewed bid, which is of questionable value, bears no relation to the underlying worth of the company and is clearly not meant to be taken seriously by shareholders,” Agnew said.

One Major Hurdle Remains

Under British takeover rules, Minorco needed to renew its bid by Thursday or risk having to wait till next fall to bid again. By announcing its offer now, Minorco gets nearly three months to proceed with its takeover attempt.

The renewed bid follows approval Friday by the European Community Commission, which conducted an informal inquiry into whether the proposed acquisition would result in a monopoly of platinum markets.

It also follows clearance by Britain’s Monopolies and Mergers Commission earlier this month. Minorco’s original bid automatically lapsed when the matter was referred to the commission in October.

Minorco faces at least one more major legal hurdle. The offer is conditional on Minorco winning its appeal against a U.S. court injunction that blocked it from acquiring more than 30% of Consolidated Gold Fields’ shares.

Higher Bid Expected by Some

Minorco’s offer would top Nestle SA’s 2.6-billion-pound, or $4.6-billion, purchase of British confectioner Rowntree PLC last year.

The latest bid is worth 14 pounds, or $24.78, a share in cash and stock at current exchange rates, for a total of $5.7 billion. Minorco’s previous offer was equivalent to $23.12 a share in cash and stock, for a total of $5.1 billion.

Consolidated Gold Fields’ shares rose 8 pence to 14.43 pounds on London’s Stock Exchange on Monday, suggesting that investors believed Minorco eventually might make an even sweeter bid.

Minorco’s shares rose 10 pence to 7.66 pounds.

Most analysts were surprised by the latest bid, having expected Minorco to offer between 15 and 16 pounds a share.

By putting forward a bid on the low side, Minorco might be buying time while it overcomes obstacles to the takeover, analysts said.

Minorco’s latest offer “isn’t the end of the game,” said Christopher Spreckley, a mining analyst at CL-Alexanders Laing & Cruickshank. “There might be another pound (per share) in it.”

Minorco also might be hoping to force Consolidated Gold Fields to disclose the price at which it values itself.

South African Link

This is a “sighting shot,” Consolidated Gold Fields’ Agnew said. “They don’t know what to pay and they want to get our defenses open.”

Based in Luxembourg, Minorco is 60% owned by the Oppenheimers’ Anglo American Corp. gold mining giant and the diamond mining group De Beers Consolidated Mines Ltd. It already owns 29.6% of Consolidated Gold Fields’ shares.

Part of Consolidated Gold Fields’ defense in the past five months has been to raise objections to Minorco’s South African connections.

Sir Michael Edwardes, Minorco’s chief executive, said: “We have now cleared all the U.K. and European regulatory hurdles put in Minorco’s way by the Gold Fields board.”

“Minorco believes that the owners of Gold Fields should now be given the opportunity to consider the new offer on its merits and to determine the issues which affect them as shareholders,” he said.

Minorco told the European Commission it would sell all Consolidated Gold Fields platinum interests should a takeover succeed.

Minorco also has said it intends to sell other minority stakes held by Consolidated Gold Fields, including a 49% stake in Newmont Mining Corp. of the United States, 48% in Renison Goldfields Consolidated Ltd. of Australia and 38% in Gold Fields of South Africa Ltd.

This would leave Minorco with Consolidated Gold Fields’ ARC construction materials businesses in Britain and the United States, and with Gold Fields Mining Corp. in North America.