Shares in Iamgold (IMG-T) were off as much as 88, or nearly 9%, at $9.17 in early trading in Toronto on Oct. 15, after media reports suggested that Russia’s Norilsk Nickel might try to scupper the company’s planned merger with South African-based Gold Fields (GFI-N).
In August, Iamgold unveiled a plan to merge its projects with Gold Fields’ assets outside of the “Southern African development community.” The $2.1-billion all-stock deal would end with Gold Fields owning about 70% of the new Gold Fields International, with Iamgold shareholders holding the remainder. Iamgold shareholders would also receive a special cash dividend of 50 per share ($75 million in all) on closing.
The two recently inked a definitive agreement, which will face shareholder votes in mid-December; the deal is scheduled to close at year-end.
The latest rumours have Norilsk Nickel already boosting its stake in Gold Fields to between 30% and 50% (anything exceeding 35% would trigger a mandatory offer to acquire minority stakes), and planning an outright takeover. Many believe the Russian miner would then move to quash the planned merger, as it infringes on its plan to become an international gold producer with Gold Fields.
Norilsk picked up its initial 20% stake in Gold Fields by paying Anglo American (AAUK-Q) US$1.16 billion in cash earlier this year. At the time, many market watchers suggested that Norilsk would eventually increase its interest. Any increase from the initial 20% would require formal market notification; none has yet surfaced.
By mid-afternoon, Iamgold shares had recover to $9.78, or 27 off their previous close; shares in Gold Fields were US$1.06 higher at US$14.85 in New York.
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