Australia’s biggest gold producer, Northern Star Resources, has rejected a AUSD 38.7 billion (USD 27.1 billion) takeover proposal from South Africa’s Gold Fields, blocking a deal that would have created the world’s second-largest gold producer after Newmont.
The unsolicited approach, submitted on September 13 and received by Northern Star on September 14, valued each Northern Star share at AUSD 27.
It comprised AUSD 7.25 in cash and 0.3125 new Gold Fields shares.
The proposal represented a 22% premium to Northern Star’s September 11 closing price, but its implied value had fallen to AUSD 25.19 by September 25 as Gold Fields’ share price declined.
Northern Star’s board unanimously rejected the proposal, saying it materially undervalued the company and came at an opportunistic time.
Chairman Michael Chaney said Gold Fields was seeking to acquire a portfolio of high-quality gold assets at a price below what the board considered their fundamental value.
The structure of the offer was also a key concern.
Almost three-quarters of the consideration would have been delivered in Gold Fields shares, leaving Northern Star investors with exposure to the South African company and its broader international portfolio.
Northern Star said the structure would expose shareholders to a materially different jurisdictional risk profile.
Had the transaction gone ahead, Northern Star shareholders would have owned about 33% of the enlarged Gold Fields.
The proposal also included a mix-and-match facility allowing investors to elect for cash, shares, or the default combination, subject to caps of AUSD 10.4 billion in cash and 447 million new Gold Fields shares.
Gold Fields, however, has not withdrawn its interest. The Johannesburg- and New York-listed miner said it had held discussions with Northern Star over six months but had received limited engagement before submitting its proposal.
Chief executive Mike Fraser said Gold Fields remained open to constructive dialogue and continued to seek engagement with Northern Star’s board.
The company argues that combining the two businesses would create a stronger global gold producer with significant exposure to Australia, North America, and Chile.
The proposed combination would have produced about 4.1 million ounces of gold over the 12 months to June 2026, according to Gold Fields.
The South African company estimates USD 4 billion to USD 5 billion of potential synergies from combining the miners’ operations and portfolios.
A major attraction is Western Australia, where both companies have substantial operations.
Gold Fields said the combined group would control eight of Australia’s top 20 gold mines, with many assets located within a relatively concentrated area around Kalgoorlie.
It also sees opportunities to optimise the portfolio and potentially sell assets to generate at least USD 4 billion for debt reduction and shareholder returns.
The bid comes as Northern Star faces pressure from activist investor Elliott Investment Management, which disclosed a 6.2% stake and has pushed the company to undertake a strategic review, including considering a sale.
Elliott has argued that Northern Star has substantial potential for further value creation and said the board should properly assess any serious offer.
Northern Star has also faced operational challenges, including problems at the processing facilities serving its Kalgoorlie operations and repeated production guidance changes.
The company is now preparing for the commissioning and ramp-up of the expanded Fimiston Mill, which it sees as an important near-term catalyst.
Northern Star’s shares rose 6.2% to AUSD 23.47 in Sydney on Monday, although they remained below the original AUSD 27 offer price.
Gold Fields shares fell more than 14% in Johannesburg during trading.
The takeover battle therefore remains unresolved. Gold Fields has signaled its willingness to continue discussions, while Northern Star has said it does not consider further engagement appropriate at present.
Its incoming chief executive, Suresh Vadnagra, is due to take over on October 5, adding another potential turning point as the Australian miner weighs its operational recovery and strategic options.