Gold Fields Denies Report Suggesting Possible Merger with AngloGold

Gold Fields (NYSE:GFI,JSE:GFI) has denied a report from Bloomberg which stated that the miner is looking to merge with rival AngloGold Ashanti (JSE:ANG).

The company issued the rebuttal on Tuesday (January 22), in the aftermath of Bloomberg releasing news that Gold Fields allegedly desired to combine with its competitor in the wake of the recent massive mergers in the gold space.

Gold Fields has taken note of the Bloomberg statement that it wants to combine with rival AngloGold Ashanti. This article is factually incorrect and we completely disassociate ourselves with this statement,” the miner noted in a brief press release.

 

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Earlier on Tuesday, Bloomberg detailed a potential transaction between the two gold producers that would have a market value of US$ 8 billion.

The news outlet claimed a “person familiar with the matter” as its source, adding that the individual wished not to be identified.

The report went on to state that bridging the companies would result in the production of approximately 6 million ounces of gold a year, which would significantly close the gap on Newmont Mining (NYSE:NEM) and Barrick Gold (TSX:ABX,NYSE:ABX) following their mega deals.

Despite Gold Fields denying Bloomberg’s claims, earlier comments from the South African miner’s CEO Nick Holland has market watchers believing that the company will make a move in the M&A space soon.

“If you are going to survive in the long term, you are going to have to look at consolidation,” Holland stated in mid-January.

The outlet’s source made additional claims that the “new company” may also consider selling or consolidating other assets as well.

Finally, the individual allegedly revealed that although a union with AngloGold would be Gold Fields’ preference, the miner is not opposed to considering a deal with another top 10 producer, especially where that would lower costs, the person said.

While AngloGold has yet to provide a comment regarding the Bloomberg story, a merger could be the answer to its struggling Mponeng mine located in South Africa.

While many analysts agree that AngloGold should leave the struggling asset behind and abandon its “home”, they are not completely sold on the miner being takeover.

James Bell, an analyst at RBC Capital Markets (TSX:RY,NYSE:RY), noted, “AngloGold is not a takeover target.” Adding,“[i]t’s a very large complicated business and has exposure to jurisdictions which are quite tough for other companies to be comfortable in.”

As of 3:42 p.m. EST, Gold Fields was up 4.19 percent, trading at US$ 3.73; meanwhile AngloGold was up 2.40 percent, trading at ZAC 17,000.00.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article. 

 

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