JOHANNESBURG (AFP) - South Africa's Harmony Gold Mining Co. Ltd. said it would bid for control of Gold Fields Ltd, valuing it at 8.1 billion dollars (6.4 billion euros) in a move which would create the world's leading gold mining group.
Harmony said it was offering a 29-percent premium for Gold Fields on the basis of 1.275 new Harmony shares for each Gold Fields share and 1.275 new Harmony American Depositary Shares (ADS) for each Gold Fields ADS.
These terms valued GFI at 8.1 billion dollars. "This transaction represents tremendous opportunities for stakeholders of both companies," said Bernard Swanepoel, Harmony's chief executive, in a statement.
"The merger of Harmony and Gold Fields will create the world's leading gold mining company based on production, reserves and resources and second largest by market capitalisation."
"The offer provides an immediate 29-percent premium calculated by comparing the closing Harmony price of 84.41 rand (13 dollars/ 10 euros) on 14 October 2004, multiplied by the proposed offer ratio (1:1.275)," the statement said.
Harmony said the offer had received the full backing of Russia's Norilsk Nickel, which owns 20 percent of Gold Fields.
"We are extremely gratified that Norilsk recognizes the full potential of our proposed transaction ... We are very pleased to have Gold Fields' biggest shareholder supporting what we are proposing," Swanepoel said.
"We did inform Gold Fields of what we are proposing ... We will continue to try to work towards gaining Gold Fields approval for this transaction," he said.
"We do believe we made a very fair offer."
Officials at Gold Fields were in a closed-door meeting and would react to the offer later, a spokeswoman said.
Based in Johannesburg, Gold Fields employs 48,000 people across its operations in South Africa, Ghana, Australia and in Finland.
South African trade unions have meanwhile expressed fears that the proposed takeover could lead to sweeping job cuts.
But Swanepeol would not be drawn into how many jobs could be on the line, telling a news conference: "There obviously will be some reductions," but adding: "We have a very good track record as job savers and not job destroyers."
The finalisation of the offer is subject to approval by the authorities at Gold Fields and the cancellation of a merger deal between that company and Canadian firm IAMGOLD concerning assets of Gold Fields held outside South Africa.
Harmony said it was a company "built on a strategy of growth through acquisitions, organic growth and focused exploration", which saw production zoom "from 650,000 ounces in 1995 to 3.3 million ounces per annum as at 30 June 2004 from operations in South Africa and Australasia".
It said: "We calculate that we need a 15-percent cost reduction on Gold Fields South African assets to justify our premium from this source alone. This is consistent with our historic track record on acquired assets, including those from Gold Fields."
Gold mines in South Africa have produced much of the world's gold since the precious metal was first discovered in the country, near Johannesburg in 1886.
At their peak, in 1970, the mines produced 1,000 tonnes of gold, equivalent to 79 percent of the world's newly mined supply that year.
South Africa is still the world's largest producer of gold, the Johannesburg-based Financial Mail reported recently, "but it mined a mere 375.8 tonnes of gold last year, or 15 percent of world newly mined supply of about 2,593 tonnes."