Gold Fields Ltd. is considering increasing the cash portion of its takeover bid for Northern Star Resources Ltd. seeking to overcome Northern Star's rejection of its initial A$38.7 billion proposal.
Northern Star rejected the original offer on Monday, stating it did not reflect the fundamental value of its portfolio or growth opportunities. The Australian miner also warned that the proposal was opportunistic and would expose shareholders to jurisdiction and operational risks.
The original bid valued Northern Star at A$38.7 billion ($27.1 billion), including both cash and shares, with Northern Star shareholders set to own approximately one-third of the combined entity. Gold Fields had characterized the proposal as a 22 percent premium over Northern Star's valuation.
Gold Fields' shares fell 12 percent in Johannesburg on Monday following the rejection, with a partial recovery on Tuesday. The company has declined to publicly comment on its deliberations.
Increasing the cash component addresses a key objection: Northern Star investors prefer less exposure to Gold Fields stock. Early-stage discussions about a revised offer are underway, with no certainty that Gold Fields will proceed, according to people familiar with the matter.
The combined entity would create the world's second-largest gold producer, with projected annual output of 4.1 million ounces, more than half from Western Australian mines. Gold Fields estimates the merger could unlock synergies worth as much as $5 billion in cost savings and operational efficiencies.
The gold industry has faced production challenges despite surging bullion prices earlier in the year. Gold prices have fallen approximately 25 percent from their January peak, widening valuation gaps and complicating acquisition execution for buyers.
