Why is Northern Star (ASX: NST) up another 8%
Northern Star (NST) is up another ~8% this morning following reports that Gold Fields is considering sweetening its rejected takeover proposal by increasing the cash component. Gold Fields’ initial approach valued NST at around A$27 a share, a ~22% premium when submitted, comprising 0.3125 Gold Fields shares plus A$7.25 cash for each NST share.
- Northern Star rejected the proposal as opportunistic and inadequate, while also highlighting the jurisdictional and operational risks associated with receiving a significant portion of the consideration in Gold Fields shares.
Bloomberg reported overnight that Gold Fields is now considering putting more cash on the table in an attempt to overcome those concerns, although discussions remain preliminary and there is no certainty a revised offer will emerge. The strategic prize is substantial: a combination would create the world’s second-largest gold producer behind Newmont, while Gold Fields has also highlighted potential tax benefits of around A$3.5bn from a transaction.
The market is clearly pricing in an increased probability of a higher bid, with NST jumping 8–9% to around A$25.15, its highest level since March, on more than three times normal trading volume while the broader ASX 200 is slightly lower.
The original A$27 proposal has effectively established a reference point for NST’s value, and with Gold Fields reportedly considering more cash, investors are now positioning for a higher and potentially more attractive offer rather than simply a revival of the original deal.
- We believe ultimate price will need to be above $30 for this takeover to get over the line.
