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Last Updated: Thursday, 2 October, 2003, 14:11 GMT 15:11 UK
'End in sight' for Ashanti bid battle
By Doreen Walton
BBC World Service business reporter in Ghana

South African miners
Sir Sam would like Ashanti to remain listed in Ghana
A lengthy bidding war for West Africa's biggest gold mining company, Ashanti Goldfields Company in Ghana, could soon be drawing to a close, according to Sir Sam Jonah, the company's chief executive.

In an interview with BBC World Business Report, Sir Sam has signalled that he expects the Ghanaian government to allow a merger of Ashanti to go through.

"The market has been kept waiting and this uncertainty is not helping anybody," Sir Sam said in an interview with BBC World Business Report.

However, even after all necessary decisions by Ashanti's board and the Ghanaian government have been made, the completion of any deal would be unlikely until sometime during the first half of next year, he pointed out.

Bidding starts

The bidding war for Ashanti has already dragged on for about half a year after the South African mining company AngloGold, the Anglo American subsidiary, in May offered about $1bn for Ashanti.

At any point in time, the Ghana government as regulator would only be asked to pronounce on one request made by the [Ashanti] board, but it wouldn't be a decision as to whether it's Randgold or AngloGold
Sir Sam Jonah
Chief executive
Ashanti Goldfields
"Ashanti's board... was minded to make a recommendation of the offer which we had received from AngloGold," Sir Sam said.

But within months other bids emerged, most notably one from London-listed Randgold which entered the race in August.

Randgold is still in the running, while other suitors which have seemed to be interested have since pulled back.

As a consequence of the emergence of the suitors during recent months, the likely price Ashanti's shareholders would receive has slowly crept higher, with AngloGold's latest offer standing around $1.4bn and Randgold's around $1.8bn.

Government stake

Ashanti is the pride of Ghana where it is the largest employer in the country.

The government owns a golden share - that is the power to veto any sale of the company - and a 16% stake in the company.

Sir Sam Jonah
Sir Sam is the only black chief executive of a major mining firm

And some observers have speculated that the government might respond to the resentment in many parts of west and east Africa of the increasing powers of South African companies by blocking any takeover.

But others insist the government is very aware of Ashanti's need to expand into more complex mining areas, in particular the development of a deposit at Obuasi, by taking advantage of the cash reserves and the special expertise with deep level mining that its suitors could offer.

Such considerations appear to have created the "perception that the Ghanaian government would make the final decision in terms of choice between the two competing bidders", Sir Sam said.

"Nothing could be further from the truth."


Regardless of whether or not the government is a stakeholder, the sale of more than 20% of a mining company in Ghana requires the approval of the government regulator, and as such the authorities do have a say.

Gold from an Ashanti mine in Ghana
Ashanti is Ghana's biggest employer
"It is a decision about a request made by the company for permission to sell more than 20%.

"At any point in time, the Ghana government as regulator would only be asked to pronounce on one request made by the [Ashanti] board, but it wouldn't be a decision as to whether it's Randgold or AngloGold," Sir Sam explained.

"The government has said that it would support, in principle, Ashanti's discussions with one party or another."


Diluting Ghana's stake in Ashanti could deal a psychological blow to the people of Ghana, even if the government were to retain a stake in a larger, combined mining group.

Ghana was called the Gold Coast in the first half of the last century, and the name Ashanti resonates with romance in the West African gold mining business where the people have mined it for centuries.

Guarding the gold was an important part of their lives, which is why the name Ashanti means "for the sake of war".

By the time that Ghana was subjugated by British expansion in Africa in the nineteenth century, the modern Ashanti mine was already in place, having been developed by South Africans.

Nowadays it is the biggest in West Africa, having produced more than $10bn worth of gold in the past 100 years.

To counter this, Sir Sam insisted that "it is definitely important, in my view, for the surviving entity to be listed in Ghana".

But he does not think either Ashanti or the Ghana government should be in a position where they can insist on the name being retained.

However, both bidders "fully appreciate the value that is in the brand that we have created, which is Ashanti, and [they] are committed to retaining that name in one way or other because of the significant attributes that brand brings", Sir Sam said.

Ashanti Goldfields chief executive Sir Sam Jonah

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