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» Harmony stands ground on Gold Fields
» Harmony to build $200m gold mine
» Harmony says more shaft closures likely
» Harmony to reconsider Gold Fields bid
» “Gold Fields bid dies May 20” – Harmony lawyer
» Commission brings Harmony mixed tidings
» We were naive - Cockerill

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Gold Fields’ fresh legal challenge

Posted: Tue, 15 Mar 2005

[] -- GOLD Fields has mounted a fresh legal challenge to Harmony Gold’s $5.2bn hostile merger bid claiming the transaction should have died on December 18. Gold Fields’ contention, compiled by attorney Edward Nathan, was addressed to Richard Connellan, CEO of the Securities Regulation Panel (SRP), and faxed on March 7.

Further submissions on the matter are likely on Wednesday (16 March) when Gold Fields appeals the SRP’s decision to grant Harmony an extension to its offer for Gold Fields to May 20. The current offer is due to expire on March 18. By introducing a new legal challenge, Gold Fields intends to smother Harmony’s proposal in yet more red tape.

The letter compiled by Edward Nathan received media attention earlier this week following an article in Business Day in which Gold Fields is quoted to have said that the SRP was biased, and had prejudged the extension of Harmony’s bid.

But other information in the nine-page letter shows Gold Fields’ attorney contending the point that Harmony’s offer was a single one, and must be dated from October 20 “… upon the posting of the initial offer”. In terms of the 60-day ruling, after which fresh applications to extend the offer must be made, Harmony’s offer lapsed on December 18.

Initially, the SRP found that Harmony’s takeover proposal for Gold Fields was structured in two phases. As a result, a bid extension was due after posting of the second stage of the offer in January. But the SRP’s appeal authorities subsequently ruled that Harmony’s offer was a single bid and must be considered active from the initial document posting.

“It [Harmony Gold] did not declare the offer unconditional as to acceptances on or around 18 December 2004 (which date is approximately 60 days after the date on which the Harmony offer was initially posted),” Edward Nathan said in the letter to the SRP.

At first glance, Gold Fields’ legal nitpicking may prove fruitless, but not ultimately so since it has delay tactics at its heart.

In truth, it is taking an extraordinarily long time to bring the curtain down on the Harmony-Gold Fields matter, a point recognised by Bernard Swanpoel, Harmony Gold CEO, who lays the blame on dithering by the regulators. The affair also shows South African authorities to be slip-shod in their execution, tardy even.

Linklaters, the British attorney retained by Gold Fields, said that analysis of the 22 takeovers that occurred in the UK since the start of 2004 showed that 17 were completed within the 60 day period set aside for such transactions. The balance that overran the time period were owing to competing bids, or a revised offer, or settlement through a scheme of arrangement that was agreed.

“In the case of Gold Fields, the takeover has currently endured for more than four and a half months, a situation that, a far as we are aware, would never be tolerated in any other jurisdiction,” Gold Fields said.