Northern Star shares pop as Australian gold miner rejects $27 billion takeover proposal

• Gold Fields’ proposal initially valued Northern Star at A$38.7 billion, representing a 22% premium to its Sept. 11 closing price.
• Northern Star’s board unanimously rejected the offer, saying it materially undervalued the company and was “highly opportunistic."

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Northern Star Resources shares jumped more than 9% Monday after the Australian gold miner rejected a $27 billion takeover proposal from South Africa's Gold Fields, saying the offer undervalued the company.

Gold Fields proposed acquiring 100% of Northern Star through a combination of shares and cash, offering 0.3125 Gold Fields shares and 7.25 Australian dollars in cash for each Northern Star share, according to a Northern Star statement Monday. 

Shares of Northern Star Resources.

The proposal, received Sept. 14, initially valued Northern Star at A$38.7 billion ($27.15 billion), representing a 22% premium to its closing price on Sept. 11. Based on Gold Fields' closing share price on Friday, Sept. 25, the implied value had fallen to A$36.1 billion. 

Northern Star said its board unanimously rejected the proposal, adding it "materially undervalues" the company and was "highly opportunistic." 

"Gold Fields has sought to acquire one of the world's premier gold portfolios at a price that falls well short of what the Board considers to be its fundamental value and at a highly opportunistic time," Northern Star Chairman Michael Chaney said. 

The miner also raised concerns that most of the offer would be paid in Gold Fields shares and that the proposal was subject to several conditions.

Northern Star told Gold Fields on Friday that its board did not consider it appropriate to engage further on the proposal. 

Bloomberg earlier reported that Gold Fields had approached Northern Star about a potential takeover. 

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