AngloGold boosts Ashanti bid (October 16, 2003)

AngloGold (AU-N) has bumped its all-share offer for Ghanaian-based Ashanti Goldfields (ASL-N) by 11.5%.

AngloGold is now offering 0.29 of an AngloGold share for each share of Ashanti; that’s up from the original offer of 0.26 of a share. Based on AngloGold’s closing price on Oct. 15, the new deal is worth about US$10.82 per share, compared with US$9.70 per share. Overall, the offer tips the scales at about US$1.4 billion.

AngloGold’s offer, which it says is final, still lags behind that of rival Randgold Resources (GOLD-Q), which remains at one Randgold share for every two Ashanti shares tendered. That deal totals a shade less than US$1.5 billion.

Ashanti’s board has unanimously approved AngloGold’s revised bid. AngloGold also has the support of Lonmin (LNMIY-O), which has a 27.6% stake in Ashanti. Lonmin has also agreed not to accept or support any bid from Randgold unless it includes a fully underwritten cash alternative. Lonmin can also withdraw its support if Ashanti’s board puts its weight behind a competing offer.

Tipping the scales in favour of AngloGold’s bid appears to be its commitment to spend US$154 million exploring and developing Ashanti’s Obuasi deeps project over the next 5 years.

AngloGold’s bid still requires approval from the Ghanaian government, which, in addition to a 17% interest in Ashanti, holds a “golden share” allowing it to veto any deal that fundamentally changes Ashanti’s structure. AngloGold expects to hear from the government by the end of the month. The proposed deal also needs the thumbs up from the US Securities and Exchange Commission and the Ghana High Court.

If it proves successful in its bid, AngloGold would nearly pull even with Newmont Mining (NEM-N), the world’s biggest gold producer, in terms of production. In the end, existing Ashanti shareholders would own around 14.5% of the enlarged company.

For its part, Randgold said it would review its position, and consider improving its offer as soon as practicable.

Shares in Ashanti were US24 higher at US$10.98 in afternoon trading in New York following the announcement of the revised bid; AngloGold’s issue was up 84 at $38.16. Likewise, Randgold shares were $1.04 higher at $23.88 on the Nasdaq.

AngloGold is a 51%-held subsidiary of Anglo American (AAUK-Q); Randgold & Exploration (RANGY-Q) holds a 43% interest in Randgold.