Magazine article New African

South Africa/Ghana: Merger or Takeover? South Africa's AngloGold Is Set to "Merge" with Ghana's Ashanti Goldfields in the Biggest Deal to Create the World's Biggest Gold Producer. but Is It Really a Merger or a Takeover

Magazine article New African

South Africa/Ghana: Merger or Takeover? South Africa's AngloGold Is Set to "Merge" with Ghana's Ashanti Goldfields in the Biggest Deal to Create the World's Biggest Gold Producer. but Is It Really a Merger or a Takeover

Article excerpt

Will it be a merger or a takeover? That was the question as AngloGold, the giant South African company set its sights on Ghana's Ashanti Goldfields. AngloGold is 51.4% owned by the South African conglomerate, Anglo-American. But the terminology has too often been used interchangeably.

Talks between the two companies had been going on for quite a while until August when the possible merger or takeover looked more like reality. AngloGold put its wallet on the table. A 1.09 billion dollar cash offer. An offer Ashanti will find difficult to refuse, after all the complexities of share holdings have been sorted out.

In an era of globalisation, size counts. And significantly so. The deal will create the world's biggest gold producer. Total output last year was 7.3 million ounces, putting it slightly ahead of the US-based Newmont, the current world champion.

It will be die biggest cross border deal to have taken place to date between two African companies and would be a major step in bringing closer to home the ideals of the African Union, more especially intra-African trade and the synergies that come with integration. South African business has shown the way forward with its bold entry into other African economics with mutually beneficial results and an untying of colonial links.

Already the mere fact of the merger will catapult the Ghana Stock Exchange (GSE) into the second biggest in Africa by market capitalisation, since Ashanti is publicly raided on the GSE, leapfrogging bigger economies like Egypt and Nigeria. The Johannesburg Stock Exchange is by far the biggest.

It is significant to note that Ashanti was the first African company to be listed on the New York Stock Exchange in 1994. Since then the company has been a model of an African success story.

The new company will be called Ashanti AngloGold in Ghana and AngloGold Ashanti in South Africa. Sam Jonah, the chief of Ashanti, will be president while Bob Godsell, the AngloGold boss, will be CEO.

For AngloGold, the merger will increase its geographical spread of assets, adding new reserves, and will give it scope for future growth. Attributable and proven reserves of AngloGold stands at 71.2 million ounces while that of Ashanti is 22.0 million ounces. With a combined total of 93.2 million ounces, the new company will become No. 1 in terms of reserves ahead of Barrick with 86.9 million ounces.

This must be especially satisfying for AngloGold executives who lost out to Newmont in a bitter battle for the Australian gold producer, Normandy, and knocked AngloGold off its perch as the leading gold producer. Anglo has fought back in this battle of size with am African challenge.

So what is in it for Ashanti? Said Ashanti's CEO, Sam Jonah: "The immense technical and financial strength of the new group will enable the malisation of the full potential of the Obuasi mine in the shortest possible time."

Anglo will spend about US$44m on exploration at Ashanti's Obuasi mine, with operating cost cut by $20 an ounce.

The Obuasi mine and ore body is mined at a depth of 1500-3000m. Anglos expertise in deep level mining means that it can be mined more quickly and efficiently. Total capital expenditure on Obuasi is estimated at $570m for the life of the mine until 2040. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.