Minorco Drops Bid : Parent of Newport Firm Wins a Round
South African-backed Minorco S.A., which had pursued Consolidated Gold Fields PLC for 8 months, gave up its bid to form the world’s largest gold-producing company after a New York judge refused Tuesday to lift an order blocking the $5.6-billion hostile offer.
Sir Michael Edwardes, chief executive of the Luxembourg-based Minorco, said his company would let its offer--the largest bid in British history--lapse today. Under British law, Minorco must wait a year before bidding again.
Consolidated earns half of its revenue from its U.S. subsidiaries, including ARC America Corp. in Newport Beach, a large construction materials company, and Newmont Mining Corp. in New York, this nation’s largest gold producer.
Minorco had repeatedly failed in efforts to lift a preliminary injunction that U.S. District Court Judge Michael Mukasey ordered last fall.
Mukasey issued the injunction at the request of Consolidated, which said the merger would violate antitrust laws.
The combination would have created a company with control over 32.3% of the world’s gold market.
Rudolph Agnew, Consolidated’s chief executive, said he was “highly delighted” with the result of the battle, calling it “a tremendous victory.”
In one letter to a U.S. congressman, Edwardes called ARC America the “crown jewel” of Consolidated’s U.S. operations. He also repeated Minorco’s intent to sell off most of Consolidated’s gold mining interests.
During the 8-month takeover battle, both sides lobbied the White House, Congress and state capitals across the United States.
Consolidated, especially, had launched an all-out attack on the takeover attempt, emphasizing Minorco’s South African connection.
Minorco is controlled by the South African De Beers-Oppenheimer syndicate, which already has a monopoly over much of the world’s diamond production. It is owned by Anglo-American Corp. of South Africa Ltd., the largest gold mining operation outside the Soviet Union, and De Beers Consolidated Mines Ltd, the largest diamond operation outside the Soviet Union.
In letters to Congress members and senators, Consolidated tried to enlist support. Banks and governmental entities, the company said, would refuse to deal with Minorco-run ARC and other U.S. subsidiaries because of local, state and federal anti-apartheid laws that prohibit or restrict contracts that benefit South African companies.
Consolidated even approached former President Reagan, asking that he invoke a federal law that would have prevented the merger on national security grounds because Consolidated’s subsidiaries also produce precious metals used for U.S. military applications.
Minorco, which owns 29.9% of Consolidated, had obtained tenders of about 25% more of Consolidated’s shares, but Mukasey’s ruling prevented Minorco from completing the takeover.
After its offer expires, Minorco may sell its Consolidated stake or present a fresh bid in a year’s time, analysts said. Some said Minorco may be back with a vengeance after the 1-year waiting period.
“Minorco continues to be the largest single shareholder in Gold Fields and we will keep the position under review,” said a statement by Minorco’s Edwardes.
