Harmony bid clears another hurdle

South Africa’s High Court has dismissed Gold Fields‘ (GFI-N) application to have Harmony Gold‘s (HMY) unsolicited take over offer declared unlawful and to block its implementation.

Gold Fields had argued that Harmony’s all-stock offer failed to comply with the South African Companies Act, as it failed to include a registered prospectus for the new shares to be issued under the offer, something Gold Fields said made the offer unlawful and of no legal effect.

“This application was one of a string of legal and regulatory attempts by Gold Fields’ directors to divert attention from the value that the Harmony offers to Gold Fields’ shareholders will generate,” said Harmony’s chief executive Bernard Swanepoel in a prepared statement.

“Gold Fields’ board and management have been determined to frustrate the ability of Gold Fields’ shareholders to assess the merits of the Harmony offers,” he added.

The latest victory comes on the heels of a ruling by the country’s Securities Regulation Panel (SRP) that Harmony and Norilsk Nickel are not acting in concert against Gold Fields. Norilsk has agreed to vote its 20% stake in Gold Fields against that company’s own plan to merge its assets outside the “Southern African development community” with those of Iamgold (IMG-T).

The Competition Commission also recently granted Harmony permission to notify as a separate party in its bid for Gold Fields, something it must do under South African merger laws. The Competition Tribunal is expected to hear Gold Field’s petition to block the early settlement portion (aimed at acquiring 34.9% of gold fields’ shares) of Harmony’s bid on Nov. 12.

“We are pleased, but not surprised, that this latest time wasting initiative has also been resolved,” said Swanepoel. “We are getting closer to the point where shareholders will be allowed to decide based on the relative merits of the two proposed transactions.”

Meanwhile, Gold Fields recently took its fight to fend off Harmony to the U.S. District Court for the Southern District of New York, where the company has filed a complaint alleging that Harmony has violated U.S. securities laws and wants the court to block Harmony’s offer until it provides shareholders with all material information about its offer and shareholders have had adequate time to digest that information. That hearing is slated for Nov. 17.

Harmony’s offer stands at 1.275 of its own shares for each Gold Field share; the offer expires Nov. 26. Harmony shareholders will voted on their company’s takeover plans on Nov. 12.

Harmony’s takeover bid needs to be approved by 75% of the votes cast at its shareholders meeting. Harmony’s two biggest shareholders, black empowerment partner African Rainbow Minerals, with about 20%, and fund manager Allan Gray, with around 14%, have recently come out in favour of the bid.

Gold Fields shareholders are scheduled to vote on their company’s plan to merge with Iamgold on Dec. 7; Harmony’s bid hinges on a rejection of that plan.

For the three months ended Sept. 30, Iamgold reported a net loss of $926,000 or (a penny a share) on revenue of US$28.1 million, compared with a year-ago net profit of US$4.6 million (3 per share) on US$23.8 million. Iamgold attributes much of the loss to costs associated with due diligence activities, financial advisory fees, and legal services related to the unsolicited takeover offer by Golden Star Resources (GSC-T) and the subsequent Gold Fields merger proposal.

In other news, Ontario’s Court of Appeal recently dismissed an appeal and the cross-appeal of an earlier judgement filed by Kinbauri and Iamgold, and confirmed that Iamgold owes Kinbauri $1.7 million. The judgement relates to a failed merger that was originally agreed to in 1990.