Randgold lacks firepower to win Ashanti -analysts
A bidding war could break out in the gold mining industry with Randgold Resources Ltd preparing a rival bid for Ghana's Ashanti Goldfields Co Ltd, which already has an offer from AngloGold Ltd, sources familiar with the matter said on Thursday.
AngloGold has made a $1.1-billion all-share offer to buy Ashanti in a deal that would pitchfork the combined company in a position that would challenge the supremacy of the world's number one gold miner Newmont Mining Corp.
Randgold is expected to launch the bid as early as next week and has been encouraged by the Ghanaian government to do so. The government has been keen to see more rival bids come forward for Ashanti, sources close to the situation said.
Both Randgold and AngloGold declined to comment and Ashanti could not be immediately reached.
The government, owner of a 17 percent stake in Ashanti, has the power to veto any acquisition of the gold miner and is also understood to be not happy with the $8.36 per share offer that AngloGold has offered.
Ashanti's American Depositary Receipts closed at $8.18 on the the New York Stock Exchange on Thursday.
So far, Randgold is the only other serious bidder that has been examining Ashanti's books, the sources said.
London-listed platinum miner Lonmin Plc owns a 32 percent stake in Ashanti and has already agreed to AngloGold's offer. But if a rival offer from Randgold comes in Lonmin is expected to ask for cash as Lonmin is a stronger company than Rangold, a source familiar with Lonmin's thinking said.
Any deal between Randgold and Ashanti may have to be structured in the form of a reverse takeover since Randgold is around half the size of Ashanti, one analyst, who declined to be named, said. The company's shareholder equity is arond $140 million. The company, however, has no debt
Randgold also may face some regulatory hurdles as its parent company Randgold & Exploration will have to seek approval from the SA Reserve Bank if it has to reduce stake in Randgold Resources.
AngloGold will also have to be paid a termination fee of $15-million if the its bid does not go through.
If Randgold launches a bid for the Ashanti this will be second time in a year that the shrinking gold mining industry will face another bid battle. Last year Newmont and AngloGold fought each other tooth and nail before Newmont gained control of Australia's Normandy Mining.
