Northern Star rejects Gold Fields’ $27 billion offer — CNBC

Australian gold mining company Northern Star Resources has rejected a takeover offer from South Africa’s Gold Fields, which initially valued the company at A$38.7 billion, or about US$27.15 billion. Following the announcement of the decision, Northern Star shares rose by more than 9% on Monday, CNBC Top News reports.

Terms of the offer

Gold Fields offered to acquire 100% of Northern Star, paying 0.3125 Gold Fields shares and A$7.25 in cash for each share. Northern Star received the offer on September 14.

Under the initial valuation, the deal was worth A$38.7 billion and represented a 22% premium to Northern Star’s closing share price on September 11. However, based on Gold Fields’ closing share price on Friday, September 25, the implied value of the offer fell to A$36.1 billion.

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Board position

Northern Star’s board unanimously rejected the offer, saying that it materially undervalued the company and was opportunistic in nature. Northern Star Chairman Michael Chaney said that Gold Fields sought to acquire one of the world’s leading portfolios of gold assets at a price that, in the board’s view, was significantly below the company’s fundamental value.

Northern Star also expressed concern that most of the proposed consideration was to be paid in Gold Fields shares and that the offer itself included a number of conditions. On Friday, Northern Star informed Gold Fields that the board did not consider it appropriate to continue discussions on the offer.