Bobby Godsell, the chief executive of AngloGold, was in Australia earlier this month, trying to sew up his $1.6bn (£1.1bn) bid for the country's Normandy Mining.
The deal, announced in September, would see AngloGold, part of the giant Anglo American empire, break out of its South African base and pull well clear of rival Barrick as the world's biggest gold producer.
But AngloGold never managed to get the Normandy board on side. Just as Mr Godsell was trying to convince Normandy shareholders that their future lay with AngloGold's all-paper deal, Newmont, a US challenger, stepped forward with a better offer, which even included a cash element.
Robert Champion de Crespigny, Normandy's founder and chief executive, was not offered a large post-deal job by Anglo. Cynics suggested this led him to seek another offer. Sure enough, Newmont came in and its proposition offered Mr de Crespigny a seat on the merged company's board. Normandy declared Newmont's bid was worth more and offered a better fit.
Furthermore, Newmont had already got a big Normandy shareholder on board – Franco-Nevada, of Canada, which holds a 19.9 per cent stake. In a complex $8bn tie-up, Newmont was proposing to buy both Normandy and Franco-Nevada, which also came, helpfully, with a nice $700m cash pile.
AngloGold's nose has been distinctly put out of joint. Its offer was already considered a fairly full price by analysts and the company expected to have it in the bag by the end of this year.
Martin Potts, an analyst at Williams de Broe, said: "AngloGold have been outgunned and outsmarted. They look to be rather sore about it."
Whichever company succeeds, it would be the world's number one gold player. It is a defining moment in the history of the gold industry. The winner will have an annual output of more than 8 million ounces a year. Gold is still a relatively fragmented mining sector, with more than 200 operators. Analysts agree consolidation is needed at the top and the bottom of the industry.
For AngloGold, the deal would not only aid its diversification – many of its South African mines are high cost – but help it escape the political risk that comes with its home territory.
Hayden Bierstow, an analyst with Commerzbank, said: "AngloGold had always stated that it wants more non-South African assets.
"The falling value of the rand against the dollar meant that it is not feasible to buy in the US. So Australia is the next best thing and Normandy is the last of the good assets there."
The jewel in Normandy's crown is its 50 per cent stake in the Kalgoorlie Operations, 350 miles east of Perth, which includes the so-called Super Pit – Australia's largest gold mine.
Although Mr de Crespigny built Normandy into Australia's biggest gold miner, critics have suggested the Super Pit has not been exploited to its fullest potential. Management of this resource is expected to improve under either bidder.
Normandy has gone for Newmont's offer despite the fact that, as AngloGold protested, the subsequent fall in Newmont's share price meant the two offers were worth about the same.
AngloGold has now resorted to a series of legal moves, complaining to Australia's Takeover Panel, first about misleading statements in the Newmont documentation. Then, on Monday, in a strongly worded statement, AngloGold asked the Takeover Panel to rule the Newmont offer as contrary to Australian law. Its challenge included the charge that Newmont is treating Franco-Nevada shareholders on better terms than Normandy shareholders.
Newmont claims these are just stalling and blames these moves for the fact it has not been able to put its offer to Normandy shareholders formally.
But the differences between the two parties are much more fundamental. AngloGold and Newmont run their operations in very different ways. Whereas AngloGold takes out forward hedging positions on much of its production, Newmont and Franco-Nevada do not believe in this.
While hedging insures against falls in the gold price, it clearly limits the upside, making it a safer but much less exciting proposition.
Newmont has stated that, should it triumph in the bid battle, it will adopt the same policy at Normandy and unwind its hedge book.
Doug Hock, a spokesman for Newmont, said: "This deal offers investors a stark choice. The new Newmont will be highly leverage to the gold price. People who invest in gold believe in its long-term potential."
Newmont is betting that the gold price will rise appreciably – having been depressed for years – and running a bigger unhedged operator will help that process along. Forward hedging, in effect, increases the global supply of gold and so brings down the price.
Mr Potts said this made the Newmont deal more popular. He said: "Putting together one pro-hedge company [AngloGold] with another [Normandy] would not be good for unwinding the global hedge position.
"If Anglo wins it will be spectacularly large but also spectacularly boring. Hedging means that a company stops being a gold mining investment and instead becomes a yield investment."
Many expect AngloGold to now try to clinch the deal by raising its offer. An independent study has concluded that both bids undervalue Normandy.
However, Anglo's dividend policy is certainly more generous than Newmont's and investors buy the stock for the safety of its high-dividend yield. This means many of its shareholders will be unhappy if AngloGold takes a huge risk by increasing its offer for Normandy.Reuse content