Gold Road Resources board backs $3.7b takeover proposal from South African giant Gold Fields

The board of Gold Road Resources (ASX: GOR) has given its approval to the $3.7 billion takeover of the company proposed by South African miner Gold Fields.

Gold Road has entered into a scheme implementation deed under which Gold Fields, one of the world’s largest gold-mining firms, has agreed to acquire 100% of its issued share capital.

The merger will tidy up the 50:50 joint venture the two firms have over the Gruyere gold mine in Western Australia.

Various considerations

Gold Road shareholders will receive a fixed cash consideration of $2.52 per share plus a variable cash consideration equal to the full value of their proportionate holding in Northern Star, valued at $0.88 per share.

The Gold Road board has unanimously recommended that shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to the independent expert concluding as such in its report.

Holders representing 7.5% of Gold Road’s total shares outstanding have provided confirmation to Gold Fields that they intend to vote all of the shares they own or control in favour of the proposal.

Delivering value

“The board has been focused at all times on ensuring that we deliver value and act in the best interests of our shareholders,” Gold Road chair Tim Netscher said.

“The directors consider that the value offered by the all-cash scheme consideration delivers compelling value for Gold Road shareholders compared to what may otherwise be available if Gold Road continued to operate as a standalone entity.”

“This cash proposal accelerates realisation of Gruyere’s value and provides certainty for Gold Road shareholders today at an attractive premium to trading levels prior to receipt of the initial Gold Fields proposal.”

‘Material premium’

Gold Road managing director and chief executive officer Duncan Gibbs said the scheme provides the company’s shareholders with an opportunity to realise certain value for their Gold Road shares.

“This offer price represents a material premium to the undisturbed share price prior to the initial Gold Fields proposal and a material premium to longer-term trading levels,” Mr Gibbs said.

Gold Fields has stated that the consideration proposed is a ‘best and final’ price that it will not increase in the absence of a superior proposal emerging.

Special dividend

Gold Road has confirmed it intends to declare a fully franked special dividend should the scheme become effective.

The final amount will be dependent upon Gold Road’s franking account balance at the relevant time.

Based on Gold Road’s current franking account balance, the dividend would equate to approximately $0.35 per share.