By Nelson Banya and Aaditya GovindRao
(Reuters) -Australia’s Gold Road Resources said on Monday it had rejected Gold Fields’ $2.1 billion buyout bid because it believed the offer materially undervalued the company and was “highly opportunistic”.
Gold Fields’ CEO Mike Fraser told Reuters he was still confident that Gold Road’s shareholders would back the deal.
With its offer, the South African miner aims to consolidate ownership over the low-cost, long-life Gruyere gold mine in Western Australia, which it operates under a joint venture with Gold Road.
“The offer attributes no value at all to the potential underground expansion of the Gruyere mine,” Gold Road said in a statement.
Gold Road said it had tabled an alternative offer to buy Gold Fields out of Guyere, but its proposal was rejected by the Johannesburg-based miner.
In a statement on Monday, Gold Fields said it was “disappointed that the Gold Road board has not constructively engaged on key elements of the proposal”.
Fraser told Reuters in an interview that there was “a different view on value from the (Gold Road) management point of view than what the market sees, which is represented by the share price”.
“We do think that the shareholders will like this transaction,” adding that he expects “more transparent conversations with their shareholders and our shareholders around the merits of this transaction”.
Engagements with some common shareholders in both Gold Fields and Gold Road had shown “strong signals” of support for the deal, Fraser added.
He said Northern Star Resources’ imminent $3.3 billion buyout of De Grey Mining, which counts Gold Road as its top shareholder, was one of the key catalysts for Gold Fields’ bid.
Under its proposal, Gold Fields said it intended to vote in favour of the Northern Star transaction.
Gold miners are undergoing a wave of consolidation this year as companies seek to grow their reserves at a time of sky high bullion prices.
Ramelius Resources agreed to take over Spartan Resources for A$2.4 billion last week. In October, Gold Fields bought Osisko Mining for C$1.93 billion ($1.35 billion), making it the full owner of the Windfall project in Canada.
($1 = 1.5929 Australian dollars)
($1 = 1.4337 Canadian dollars)
(Reporting by Aaditya Govind Rao in Bengaluru and Nelson Banya in Harare; Editing by Eileen Soreng, Mrigank Dhaniwala and Susan Fenton)
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