The South African miner's giantkilling bid for Gold Fields didn't come off but it sure was expensive. Both sides made losses. Harmony's, though, are truly eyewatering. Its $90m of fees and capital losses are equivalent to 3% of its market value.
But the $5bn allshare offer was always a stretch. Moneylosing small companies tend to find obstacles when buying profitable bigger ones. Regulatory approval will not come before midMay. But by then the offer could loose the support of Norilsk, which owns 20% of Gold Fields. Regulatory approval won't come before May. By then Norilsk, the Russian miner which owns 20% of Gold Fields, may no longer support the bid.
The conversations cannot be easy. Gold Fields, Harmony and Norilsk all have good reasons to distrust each other. But they are all also under strong pressure to find a peaceful solution. That requires someone to abandon an entrenched position. The Harmony bid for Gold Fields is out of the money. And Norilsk must not be too happy with its ally. So it wants to talk. Gold Fields is willing to listen, because it does not like having 32% of its shares in hostile hands. But there is no obvious alternative.