Anglo adds cash to Normandy bid

AngloGold (AU-N) has sweetened its bid for Australian-based gold producer Normandy Mining (NDY-T) with an A20 cash distribution and, in a bid to bring something out of its takeover fight with Newmont Mining (NEM-N), has dropped its minimum tender condition.

The moves, made last night between the closing of the North American markets and the opening of the Australian exchange, brought the notional value of AngloGold’s bid to A$1.65 per Normandy share, or A$3.6 billion. It also moved AngloGold’s offer into the A$1.48-to-A$1.88 range cited by Normandy’s valuation firm, Grant Samuel. Normandy shares closed at A$1.58 following the announcement of the new offer.

AngloGold moved out its deadline date to Dec. 27 and the company added a hurry-up incentive for Normandy shareholders, who were told they could expect settlement within five days of tendering their shares. The Newmont deal does not close until January.

The A20 per share increase would, if all the shares were tendered, cost about A$448 million (US$234 million). AngloGold had about US$236 million in cash and short-term deposits at the end of September, and so could nearly cover the immediate cash requirement. AngloGold also has about US$230 million coming to it from the sale of its Free State assets in South Africa to Harmony Gold Mines (HGMCY-Q).

Franco-Nevada Mining (FN-T), which, with 19.9% of Normandy is the company’s largest shareholder, has committed to the Newmont offer as part of a larger merger deal and pledged a breakup fee of US$100 million if it backs out. The cash distribution from Normandy would net it about US$89 million above the earlier offer, which would nearly pay for the breakup.

In a conference call on Thursday, Robert Godsell, AngloGold’s chief executive, said the company would probably tender to a higher Newmont offer if this offer were only to net a minority of Normandy shares. Another possible scenario would be asset trades: Godsell specifically mentioned AngloGold’s desire to hold a 100% interest in the Crixas gold mine in Brazil, which is a joint venture with Normandy and TVX Gold (TVX-T).

AngloGold closed R11 lower at R333 on the Johannesburg exchange, making the new offer equivalent to A$1.55 at the end of trading. On New York, Newmont was down US18 to US$19.52, bringing its bid to A$1.45, plus a conditional offer of A5 if 90% of Normandy shares are tendered.

Franco-Nevada (which has an offer of 0.8 Newmont shares if Newmont’s Normandy bid is successful) closed 14 lower at $22.85 on Toronto.