The gap narrowed between the all-share bids of two rivals competing for Ghana's Ashanti Goldfields yesterday as their respective stocks lurched in opposite directions.
The London-based mining group Randgold Resources launched a bidding battle on Friday for Ashanti, which had already agreed a $1bn (£620m) takeover by South Africa's AngloGold, with an all-share offer valued about 30 per cent higher than its rival.
But the premium of Randgold's bid over AngloGold's has been deflated to under 10 per cent, however, as its shares slid and those of AngloGold's surged.
Analysts said the much smaller Randgold had scant chance of succeeding with its bid, especially if the current trend continued and the Randgold offer lost more of its premium.
Shares in Randgold, which has about half the market capitalisation of Ashanti, lost 85p to close at 1,270p yesterday. AngloGold's shares in Johannesburg rose 5.4 per cent to close at 26,350 rand.
Randgold proposed to issue one of its shares for every two of those in Ashanti, which operates in four African countries, while AngloGold offered 26 of its shares for every 100 of the Ghanaian company's.
AngloGold, which is 51 per cent owned by Anglo American, the London-based mining multinational, would have to be paid a termination fee of $15m if its bid does not go through, which further undermines the premium on Randgold's bid.
Without a big premium, analysts said Randgold had little to offer shareholders of Ashanti, which needs heavy investment to develop its prized asset, the massive Obuasi mine in Ghana. David Davis, analyst at SCMB Securities, said: "Randgold doesn't have extensive operational experience and they have no real synergies to bring to the party."
The Ghanaian government, which owns a 17 per cent stake in Ashanti, can veto any acquisition and is believed to be uncertain the AngloGold deal is the best it can get.
Sources close to the situation have told the news agency Reuters that Randgold had been encouraged to make a bid by the Ghanaian government, keen to see other offers for Ashanti.
Ashanti's biggest shareholder, the London-listed platinum mining group Lonmin with a 28 per cent stake, said it would wait for Ashanti's decision on the two bids.