Consolidated Gold Fields v. Anglo American Corp.
| Decision Date | 24 October 1988 |
| Docket Number | No. 88 Civ. 7191 (MBM).,88 Civ. 7191 (MBM). |
| Citation | 698 F. Supp. 487 |
| Parties | CONSOLIDATED GOLD FIELDS, PLC, Newmont Mining Corporation, Newmont Gold Company, and Gold Fields Mining Corporation, Plaintiffs, v. ANGLO AMERICAN CORPORATION OF SOUTH AFRICA LIMITED, De Beers Consolidated Mines Limited, and Minorco S.A., Defendants. |
| Court | U.S. District Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
Lewis A. Kaplan (Jay Greenfield, Sidney S. Rosdeitcher, Lewis R. Clayton, Doreen Le Pichon, Kenneth Harmon, Jeh C. Johnson, Bruce Handler, Steven Fasman, Barbara L. Carter, Elizabeth Holland, Alexander Vasilescu, Victoria Ortiz and Daniel G. Cort, on the briefs), Paul, Weiss, Rifkind, Wharton & Garrison, Sidney Stein (Daniel Rothstein and Roanne L. Mann, on the briefs), Stein, Zauderer, Ellenhorn, Frischer & Sharp, New York City, for plaintiffs Consol. Gold Fields, PLC and Gold Fields Mining Corp.
Richard J. Holwell (Ronald W. Davis, on the briefs), White & Case, New York City, for plaintiffs Newmont Mining Corp. and Newmont Gold Co.
Jeremy G. Epstein (Kenneth M. Kramer, Rachel E. Deming, Kenneth A. Freeling, Edward Han, Alan Goudiss, James A. Rolfes, Idelle R. Abrams, Jennifer Bard and Karen Hart on the brief), Shearman & Sterling, New York City, for defendant Minorco, S.A.
SECOND AMENDED OPINION AND ORDER
Plaintiffs Consolidated Gold Fields PLC (Gold Fields), its wholly owned subsidiary Gold Fields Mining Corporation (Gold Fields Mining), Newmont Mining Corporation (Newmont) and its 90% subsidiary, Newmont Gold Company (Newmont Gold), move to enjoin preliminarily defendants Anglo American Corporation of South Africa Limited (Anglo), De Beers Consolidated Mines Limited (De Beers), and Minorco, S.A. (Minorco) from proceeding with a hostile tender offer for all of Gold Fields' stock. Plaintiffs allege that defendants' proposed acquisition violates §§ 10(b) and 14(e) of the Securities Exchange Act, 15 U.S.C. §§ 78j(b), 78n(e) (1982) and S.E.C. Rule 10b-5, 17 C.F.R. § 240.10b-5 (1988), promulgated thereunder, § 7 of the Clayton Act, 15 U.S.C. § 18 (1982), and §§ 1 and 2 of the Sherman Antitrust Act 15 U.S.C. §§ 1, 2 (1982), and they therefore seek their injunction pursuant to 15 U.S.C. § 78aa (1982) for the securities claims, and § 26 for the antitrust claims. For the reasons discussed below, plaintiffs' prayer for relief is denied under the securities laws for lack of subject matter jurisdiction, and is granted under the antitrust laws.
Gold Fields is a British corporation with half of its assets in the United States, and 2.5% of its owners here. (10/21/88 Tr. p. 7). Sixty percent of these American owners own their shares through trustees, and 40% own their shares through banks, who issue American Depository Receipts (ADR's) traded over the counter in the United States. (10/21/88 Tr. p. 7). An ADR allows the ownership and voting interest in a foreign corporation's securities to be traded here, even though those securities are not registered here. See 17 C.F. R. §§ 229, 230, 239.13 (1988). However, in order to remain exempt from registration in the United States, the foreign corporation itself or the government that incorporated it must make filings with the SEC pursuant to SEC Rule 12g3-2.
Gold Fields owns a 48% stake in Renison Gold Fields Consolidated Limited (Renison) an Australian gold miner, and a 38% stake (and a 48% voting interest) in Gold Fields of South Africa Limited, the second largest gold miner in South Africa. (First Kaplan Dec. Exh. 2; Exh. 3, p. 310). In addition, Gold Fields wholly owns Gold Fields Mining Corporation, a Delaware corporation with headquarters in New York and gold mines in California and Nevada. However, the crown jewel in Gold Fields' assets is its 49.3% stake in plaintiff Newmont Mining Corporation (Newmont). (First Kaplan Dec. Exh. 1, p. 6). Newmont is a Delaware corporation headquartered in New York. Newmont, in turn, owns 90% of plaintiff Newmont Gold Company (Newmont Gold), a Delaware corporation with headquarters in New York, the largest gold producer in the United States. Newmont also owns 75% of Newmont Australia, Ltd., an Australian gold miner. (Parker Dec. ¶¶ 5, 10, 12).
Gold Fields and its various associated companies are the second-largest gold producer in the free world, mining 12% of the non-communist world's production. (Du Boulay Dec. ¶ 5). Gold Fields' gold mining operations are generally more efficient than South African mines, and its market share is expected to increase over the next few years because of its expansion plans. (Stewart Affidavit ¶¶ 11-14; Du Boulay Dec. at ¶ 6).
Defendant Minorco is a Luxembourg societe anonyme. Over a third of Minorco's holdings are in the United States, and include a 56.2% equity interest (and 43% voting interest) in Inspiration Resources Corporation, a 48.3% effective equity interest in Adobe Resources Corporation, a 80.6% share of Danville Resources, Inc. and a 30.3% share of Engelhard Corporation, a metals refiner. (First Kaplan Dec. Exh. 9, pp. 5-7, 13; Exh. 10, pp. 3-5, 10; Exh. 11, p. 16).
Minorco shares are traded in England, and Minorco ADRs are traded over the counter in the United States. (First Kaplan Dec. Exh. 10 p. 27). However, Minorco claims that it does not facilitate the trading of these ADRs, and there is no assertion that Minorco itself trades them. (Fisher Dec. at ¶¶ 3, 8).
Neither is there any allegation that Minorco operates any of the United States companies in which it has a stake. (Fisher Dec. at ¶ 4). Minorco has no employees in the United States, does not own or lease real property in the United States, has no bank accounts, post office boxes or telephone listings here, does not solicit and never has solicited business here, has never sued here, and has never applied for a license to do business here. (Fisher Dec. at ¶¶ 4-6).
Anglo is a South African company, with headquarters there and offices in England. (First Kaplan Dec. Exh. 4, p. 1). Anglo and its subsidiaries own or substantially control mines which collectively produce the most gold in the free world. (Du Boulay Dec. ¶ 4). E. Oppenheimer & Sons Limited, a company allegedly controlled by Oppenheimer, owns 8.2% of Anglo outright. (First Kaplan Dec. Exh. 3, pp. 40-41, 299-300).
De Beers is also a South African company with headquarters there and offices in England. (First Kaplan Dec. Exh. 6, p. 1). De Beers mines and markets diamonds, advertising its wares in the United States using the slogan "a diamond is forever." (First Kaplan Dec. Exh. 6, pp. 48-50). De Beers and its affiliates have been sued for monopolizing the diamond market, and have concluded those suits through consent decrees prohibiting De Beers and its affiliates from price fixing, market allocation, or bid rigging in the diamond grit market. United States v. De Beers Indus. Diamond Div. (Ir.) Ltd., 1978-1 Trade Cas. (CCH) ¶ 62,056 (S.D.N.Y.1976); United States v. De Beers Indus. Diamond Div. Ltd., 1976-1 Trade Cas. (CCH) ¶ 60,825 (S.D.N.Y.1976). In addition, De Beers is a participant in the Central Selling Organization, an organization that maintains price stability in the diamond market. (First Kaplan Dec. Exh. 6, p. 50).
Plaintiffs allege that through a complex web of corporations and associations, Anglo and De Beers are controlled by Harry Oppenheimer. In that regard, plaintiffs assert Minorco is 39.1% owned by Anglo and 21% owned by De Beers. (First Kaplan Dec. Exh. 9, p. 17). In addition, Harry Oppenheimer has an "indirect partial" 7% interest in Minorco's shares. (Ogilvie Thompson Dec. ¶ 5). Moreover, four of Minorco's directors reside in the United States, and three of them sit on the Anglo board, and two of those three sit on the De Beers board. (First Kaplan Dec. Exh. 9, p. 4). Gavin Relly, a Minorco director, is chairman of Anglo, and Oppenheimer family members hold three seats on Anglo's board of directors. If looked at in total, Minorco and Anglo have five directors in common, and Minorco and De Beers have six. Nevertheless, Minorco asserts that Oppenheimer does not control Minorco through Anglo and De Beers. (Edwardes Dec. ¶ 4; Ogilvie Thompson Dec. at ¶ 16). However, plaintiff concludes that Oppenheimer controls inefficient gold mining facilities that in 1987 produced approximately 270 tons, or 20% of the 1,373 tons mined that year. .
On February 12, 1980, between 9:15 and 9:55 a.m. London time, De Beers and Anglo bought 29.4% of the stock of Gold Fields in open market transactions. (First Kaplan Dec. Exh. 15, p. 14). In April 1981, representatives of Minorco, De Beers and Anglo met in New York to discuss purchasing a large share of Newmont, and draft agreements were drawn up and discussed in New York. . These discussions eventually broke down. (Leather Dec. at ¶ 6).
On November 1, 1983, Gold Fields agreed not to buy over approximately 49.9% of Newmont's stock in exchange for a certain measure of control over Newmont's fundamental business planning. (Second Kaplan Dec. Exh. 12, §§ 6, 8). Called a standstill agreement, for obvious reasons, the agreement binds only Gold Fields and its subsidiaries. Id. at § 1. It does not bind Minorco now, nor would it bind Minorco if Minorco were to succeed in this tender offer. Id. at §§ 2a and 1.
In late 1986 and early 1987, Minorco and Gold Fields again discussed merging, but again the talks collapsed. (Ogilvie Thompson Dec. at ¶¶ 19-24). On September 21, 1988, Minorco announced its intention to commence the tender offer for the rest of the Gold Fields stock. (First Kaplan Dec. Exh. 16 (press report)). On October 4, 1988, the tender offer began. In preparing for the present tender offer, Minorco hired the law firm of Shearman & Sterling. Shearman & Sterling, apparently believing that United States law applied to the tender offer, wrote a letter to Newmont on September 21, 1988 which says in part "The...
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