In a response to a second bid from Newmont Mining (NEM-N), Santa Fe Pacific Gold (GLD-N) has agreed to sit down and begin negotiations about a business combination between the two companies.
Newmont offered Santa Fe a stock deal valued at US$16.50 per Santa Fe share (or US$2.2 billion). According to the deal, Santa Fe shareholders would receive 0.4 share of Newmont for every share of Santa Fe.
Santa Fe has made it clear, however, that it is still party to a merger agreement with Homestake. Under than agreement, Homestake would offer 1.1 shares for every Santa Fe share, effectively giving Santa Fe a 50%-interest in the new company.
Bruce Hansen, Santa Fe’s senior vice-president of corporate development, said the decision to at least talk with Newmont is in the best interests of Santa Fe’s shareholders, though he would give no assurances that the talks will bear fruit.
Newmont faces several obstacles to its attempt to acquire Santa Fe. The Santa Fe-Homestake proposal comes with a US$65 million break-up fee, and Santa Fe can implement a shareholders’ rights protection plan to thwart the takeover.
Asked how this affects Homestake, Santa Fe spokesman Michael Steeves said, “It is somewhat of a non-event; nothing in our agreement precludes Santa Fe from talking to Newmont.”
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