24 May – LAWFUEL – The Law News Network – Gold Fields on Friday 20 May defeated the US$8 billion hostile offer by Harmony Gold Mining Company, which was first launched on 18 October 2004.
The defence was conducted on a number of fronts including litigation in the US, led by Linklaters and assisted by Skadden Arps, and litigation and competition hearings in South Africa led by Edward Nathan.
The all paper offer was structured as an unusual two-tier bid (which would not have been allowed in many other jurisdictions) in an apparent effort to gain control of Gold Fields without first obtaining the necessary regulatory clearances. The first offer, which was for up to 34.9 per cent of Gold Fields’ outstanding shares (just short of the 35 per cent level which triggers a mandatory offer for the entire company under South African law), closed on 26 November 2004 with only 11.8 per cent of the Gold Fields shareholders tendering their shares.
The second offer, for the remaining Gold Fields shares, was subject to a number of conditions, including approval of the South African competition authorities.
A key plank of the defence was suing Harmony in relation to its gold reserves in the New York courts. Linklaters partners Paul Wickes and Jim Warnot led the US litigation team. Following this court action, Harmony’s independent mining report on its gold reserves, produced by SRK, only became available and was sent to Gold Fields’ shareholders in May 2005 and not December 2004, the date stated in the Harmony offer document. This was barely two weeks before the Harmony offer closed and contained three different reserve numbers.
In a final twist, the High Court in South Africa ruled on Friday 20 May that the Harmony offer actually lapsed on 18 December 2004. This was because an invalid extension was granted to Harmony by the executive director of the South African Securities Regulations Panel from the Rule that an offer must become unconditional as to acceptances within 60 days of the posting of the Offer Document.
Linklaters’ team of lawyers, from six offices and 14 practice areas, was led by partners Jennifer Schneck and Charlie Jacobs. Linklaters worked closely with Gold Fields’ South African lawyers, Edward Nathan & Friedland and other international counsel, as well as Gold Fields’ investment banks, Goldman Sachs and JP Morgan.
Linklaters’ M&A partner and head of mining Charlie Jacobs said:
“We are delighted to have acted for Gold Fields and to have played a part in its successful defence against Harmony’s hostile bid. A core team of lawyers across different practices and jurisdictions advised on the transaction and various team members travelled to Johannesburg, Cape Town, New York and Moscow in a plot that took many twists and turns.”