Finlayson told the audience he did not think Northern Star would fall into foreign ownership on the current terms, and drew a comparison with Gold Fields’ approach to its Gold Road acquisition. The bid’s structure is the sticking point: roughly 73 percent of the implied consideration was new Gold Fields shares with only about 27 percent cash, leaving Northern Star shareholders holding about a third of the combined entity. Finlayson said Gold Fields would need to increase the cash amount, and questioned the estimated $4-5 billion in synergies given the bidder had not conducted due diligence on Northern Star.
Northern Star’s board unanimously rejected the confidential September 14 proposal on September 28, calling it highly opportunistic and below fundamental value. The offer valued the company at A$38.7 billion ($27.1 billion) based on Gold Fields’ September 11 closing price, about A$27 a share and a 22 percent premium, but the implied value had since fallen to A$25.19 a share, a 14 percent premium, as Gold Fields’ own shares declined. Under the offer, shareholders would have received 0.3125 new Gold Fields shares and A$7.25 in cash per share, with total cash capped at A$10.4 billion. The board also objected to the conditionality of the proposal, the hard exclusivity requested, and the jurisdictional risk of the scrip, and cited the timing ahead of commissioning and ramp-up of the Fimiston mill expansion at KCGM and incoming chief executive Suresh Vadnagra’s October 5 start.
Gold Fields said Northern Star’s assets complemented its portfolio and that the combination would create the world’s second-largest gold producer after Newmont. The company said discussions had stretched back about six months and that it remained focused on constructive engagement, declining to rule out an improved or hostile bid. Activist Elliott Investment Management had earlier pressed Northern Star to conduct a strategic review that could result in a sale. The question now is whether Gold Fields returns with more cash or walks away.