Homestake Mining offers bid for Santa Fe Pacific Gold


SAN FRANCISCO -- Home-stake Mining Co. agreed to buy Santa Fe Pacific Gold Corp. for $2.3 billion in stock, topping last week's offer by Newmont Mining Corp. and setting the stage for a possible bidding war.

Newmont spokesman Doug Hock said the Denver-based gold producer was deciding whether to respond to Homestake's $17.42-a-share bid for Santa Fe. On Thursday, Newmont made an unsolicited offer of $2 billion, or $15.68 a share, in an attempt to create North America's largest gold-mining company.

Santa Fe Chairman and Chief Executive Patrick James told analysts in a conference call yesterday that his company rejected Newmont's approach a week before Newmont made it public. "There were no discussions [with Newmont] after we rejected it before Thanksgiving," James said. "This was not an auction."

Any company that wants to beat Homestake's offer would have to pay a $65 million breakup fee that Santa Fe agreed to pay Homestake if their transaction is called off, James said.

"I don't think Newmont will come back with a competing bid," said Vahid Fathi, analyst at Everen Securities Inc.

"I don't think their management style is to get into a bidding contest," he said.

Newmont would find it difficult to boost its bid and still claim that the combination would add value for shareholders after the first year, said Merrill Lynch & Co. analyst David Christensen.

Santa Fe's shares rose because of the Homestake offer and the potential for other bids.

The stock closed up $1 to $16.375 yesterday, a six-month high, in trading of 7.8 million shares, more than 10 times the three-month daily average.

Homestake shares fell 87.5 cents to $14.75 and Newmont stock rose 12.5 cents to $47.

Pub Date: 12/10/96

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