Gold Fields, the South African gold producer, has offered to buy out its biggest shareholder in an attempt to fend off the $8.1bn (£4.4bn) hostile bid from its rival Harmony.
Ian Cockerill, the chief executive of Gold Fields, has approached Norilsk Nickel, which owns 20 per cent of Gold Fields shares, in the hope of reversing the Russian metals group's support for the all-share offer from Harmony. The buy-back would form part of a wider distribution of cash to shareholders that would be funded by selling off Gold Fields' overseas operations. These have an estimated value of $3bn-$3.5bn.
The plan hinges on shareholders voting down the acquisition of Canada's Iamgold, the unpopular deal which provoked Harmony's hostile approach last month.
Mr Cockerill believes that Norilsk is keen to sell for cash and that Gold Fields' lawyers will be able to work around the irrevocable undertaking the Russian group has given to sell its shares to Harmony.
The Harmony camp dismissed Mr Cockerill's move as one of desperation. One source said: "The plan only works if shareholders vote against Iamgold, and if he can sell the overseas operations, but by then his strategy is in tatters. This is a dream-world plan."
Gold Fields believes that shareholders would approve the $2bn buyout of Norilsk, especially if it was accompanied by a wider return of cash. The plan could increase the value of their remaining holdings if the share buy-back was conducted at a high price. It would also increase earnings per share.
Mr Cockerill accepted for the first time, in a letter to shareholders last week, that the $2.1bn acquisition of Iamgold was unpopular.
Harmony will learn this Friday how many shareholders have accepted its offer to buy up to 34 per cent of Gold Fields shares, the first part of the unusual two-stage takeover offer.
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