Shares in Ashanti Goldfields, the Ghanaian miner at the centre of a bid battle, are expected to leap this morning as investors bet AngloGold will have to improve the terms of its $1bn (£620m) takeover of Ashanti.
AngloGold's attempt to become the world's biggest gold miner were dealt a blow late on Friday night after its smaller rival Randgold Resources sought to break up its agreed deal with an indicative $1.46bn offer for Ashanti.
Both bidders are expected to come under pressure from Ashanti's biggest investor, the platinum mining group Lonmin, to include a cash alternative to their all-share offers. With a 28 per cent stake in Ashanti, Lonmin - along with the Ghanaian government - will play a key role in determining the future of Ghana's national heirloom.
Lonmin, headed by the veteran banker Sir John Craven, has already thrown its weight behind AngloGold's deal, saying last week that it supported Ashanti's board. The company, which was spun out of the late Tiny Rowlands's conglomerate Lonrho in the Nineties, has been keen to realise value from its stake in Ashanti for some years. It regards the shareholding, a hangover from when it used to own the Ghanaian gold miner, as an investment and would be unwilling merely to swap the shares for a reduced stake in Randgold, which is almost half Ashanti's size in terms of market capitalisation.
AngloGold, which is part-owned by Anglo-American, the London-based mining multinational, has hinted it may consider a cash alternative to those investors who do not want its paper. The company, which announced its bid last Monday evening, was unavailable for comment yesterday.
Reports suggest the Ghanaian government, which gained a 17 per cent stake in Ashanti after part-nationalising the company, was unwilling to see AngloGold swallow its single biggest asset. It would prefer to see more rival bids come forward and is understood to have encouraged Randgold to make its move. As well as handing out the country's mineral mining licences, the government holds a golden share in Ashanti, which gives it a veto over any takeover.
Randgold is offering one of its shares for every two Ashanti shares. Talks between the two are still at an early phase and the proposal is conditional on due diligence, Randgold said.
If Randgold launches a formal bid for Ashanti, it will be the second time in less than 12 months the gold mining industry has faced a bid battle. Last year Newmont, the world's biggest gold miner, vied with AngloGold for control of Australia's Normandy Mining. Newmont won.