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Highlights

  • Gold Road shares rise 9.8% after new acquisition proposal from Gold Fields
  • Shareholders to receive AUD2.52 per share and a variable cash consideration
  • A special dividend of 35 cents per share is set if the scheme goes through

Gold Road Resources Ltd (ASX: GOR) shares are experiencing a significant uptick today, following the release of a new acquisition proposal. The S&P/ASX 200 Index (ASX: XJO) gold stock entered an intraday trading halt on Friday, as speculation mounted around a potential change of control transaction. Upon the resumption of trading this morning, Gold Road shares surged 9.8%, reaching AUD3.26 per share.

The jump follows Gold Road’s announcement that it has entered into an agreement with Gruyere Holdings, a wholly owned subsidiary of South African gold mining giant Gold Fields Ltd (NYSE: GFI), to acquire 100% of the company. The acquisition would be carried out through a scheme of arrangement, and shareholders would receive $2.52 per share, subject to any special dividend declared before the scheme's implementation.

Additionally, shareholders will receive a variable cash consideration equal to the value of their proportionate holding in Northern Star Resources Ltd (ASX: NST). As of May 2, the total cash consideration is valued at $3.40 per share. The proposed acquisition values Gold Road’s equity at approximately AUD3.7 billion.

This new offer represents a 12% increase from Gold Fields' previous offer of $3.05 per share, which Gold Road had rejected in late March, citing its undervaluation of the company. The updated offer has been met with a unanimous recommendation from Gold Road’s board, who now support the scheme in the absence of a superior proposal.

Should the scheme go through, Gold Road’s board also plans to declare a fully franked special dividend of 35 cents per share, adding additional value for shareholders.