The Takeovers Panel announced today that it has declined an application by AngloGold for a declaration of unacceptable circumstances in relation to Newmont Mining's proposed bid for Normandy Mining. The application (Normandy 04) related to the value offered indirectly to Franco-Nevada shareholders for their interests in Franco-Nevada's 19.9% holding in Normandy (under the proposed Canadian law Plan of Arrangement) compared to the value offered directly to Normandy shareholders for their Normandy shares under Newmont's bid for Normandy.
The Panel is not convinced that the proportion of the value of Franco-Nevada which its shares in Normandy constitute is sufficient to assert that acquiring those Normandy shares was the primary purpose of Newmont's proposed acquisition of Franco-Nevada. Therefore the Panel is not convinced that it is appropriate to attempt to allocate different amounts of value to the different assets within Franco-Nevada to determine a separate amount which it could decide had been offered by Newmont to the Franco-Nevada shareholders in order to gain control over Franco-Nevada's Normandy shares.
However, it notes that in the analysis provided by AngloGold in its initial submissions to the Panel on 27 November, the Normandy shares are given a value (on a Net Asset Value basis) of less than 43% of the non-cash and bullion assets of Franco-Nevada. If the Panel were to accept this as a definitive value it would not consider that this would be a basis for treating the Normandy shares as the primary purpose for Newmont acquiring Franco-Nevada.
Even if it were possible definitively to determine the values of the different asset classes of Franco-Nevada, the Panel does not accept AngloGold's argument that the whole of any premium which might be ascribed to the proposed consideration for Franco-Nevada should be applied to Franco-Nevada's parcel of Normandy shares. The Panel considers that the royalty assets which comprise the majority of Franco-Nevada's other non-cash and non-bullion assets cannot reasonably be described as readily negotiable in the same way as cash and bullion and therefore cannot be discounted in the same way as cash and bullion when considering premia. Further, the Panel accepts the proposition that Franco-Nevada as an entity may well be appropriately valued at more than merely the sum of its current assets. It notes that both Franco-Nevada and Newmont shares have usually traded at prices well above net asset value. These considerations further reduce the feasibility or appropriateness of attempting to ascribe differing proportions of the value proposed to be offered to Franco-Nevada shareholders to different asset classes.
The Panel's decision in relation to attributing differing portions of the value of Franco-Nevada to different asset classes means that it is not feasible or available to assert that any of the value proposed to be offered for Franco-Nevada shares can be applied in the Minimum Bid Price Rule in section 621(3) of the Corporations Act. Similarly, the value proposed to be offered in the Plan of Arrangement cannot be taken to be an inducement that would be required to be disclosed under section 636(1)(i), or prohibited under section 623 of the Act.
The sitting Panel, in this matter is David Gonski (sitting President), Meredith Hellicar (sitting Deputy President) and Ilana Atlas.
The Panel will advise when its reasons in this decision are published on the Panel's website www.takeovers.gov.au .
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AngloGold's analysis of 26 November, proposed a NAV of Franco-Nevada of C$2,342 million, of which C$628 million was ascribed to Franco-Nevada's royalty assets and C$501 million was ascribed to the market value of Franco-Nevada's Normandy shares as at 30 October 2001.
AngloGold has provided a further analysis based on the recently revised proposed Newmont offer, but the proportional values appear not to change materially under the revised analysis.