Gold Fields (GFI-N) has taken its fight to fend off a hostile takeover bid by fellow South African miner Harmony Gold (HMY-N) to the United States District Court for the Southern District of New York.
Gold Fields has filed a complaint with the Court alleging that Harmony has violated U.S. securities laws, and wants the Court to block Harmony’s offer until Harmony provides shareholders with all material information about its offer, and shareholders have had adequate time to digest the information.
Harmony is offering Gold Fields shareholders 1.275 of its own shares for each Gold Field share. The deal includes an early settlement on 34.9% of Gold Fields shares; that portion of the offer closes 30 days after the Oct. 18 launch date and will be followed immediately thereafter by a compulsory follow-on offer to acquire the remainder of its Gold Fields shares. The offer expires Nov. 26.
Gold Fields contends that the early settlement portion of Harmony’s offer is unlawful, as the registration statement and other related documents filed with the U.S. Securities and Exchange Commission are "misleading, inaccurate and omit material information about Harmony and its coercive two-step offer structure."
Gold Fields says the lawsuit is aimed at protecting its shareholders, which it believes are being forced to make an investment decision without accurate and complete information about Harmony’s offer, and subsequent plans if its bid is successful.
The U.S. lawsuit is just the latest in a barrage of challenges being launched by Gold Fields. The company has also petitioned South Africa’s High Court, Competition Tribunal, and Securities Regulation Panel to block Harmony’s bid. The Competition Tribunal has scheduled a hearing to consider Gold Field’s petition to block the early settlement portion of Harmony’s bid for Nov. 12.
Meanwhile, the Competition Commission recently granted Harmony permission to notify as a separate party in its bid for all of Gold Fields.
Under South African law, an acquiring firm must apply to the commission for permission to file separate notification of the merger. The commission will then advise the target firm of the notification and direct it how to comply with the notification requirements. The target company has ten business days to comply; otherwise the acquiring firm can apply to file on its behalf.
As part of its application to the commission, Harmony indicated that its proposed merger would result in no more than 1,000-1,500 management positions being eliminated. Harmony figures the losses amount to a shade more than 1% of the combined company’s workforce.
Once both companies have met the notification requirements, the commission has 40 business days to investigate the merger and make a recommendation to the Competition Tribunal. Thereafter, the Tribunal must schedule a public hearing within 10 business days, after which it will approve, impose conditions on, or prohibit the merger.
Gold Fields’ shareholders are slated to vote on their company’s plan to merge its assets outside the “Southern African development community” with those of Iamgold (IMG-T) on Dec. 7; Harmony’s bid hinges on the plan being rejected. Harmony shareholders will vote on their company’s takeover plans on Nov. 12.
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